Nvidia (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD) are the most popular and compelling chip stocks to buy. Although Nvidia dominates the AI chip space, AMD is a clear challenger to the company for dominance. That one-two positioning for AI preeminence has positioned the two stocks as leading investments.
With AI expected to continue booming, investors want to know where the next compelling chip stock opportunities are.
Fear not if you own both Nvidia and AMD. There are many good chip shares to invest in today. Although I don’t discuss it in this article, Taiwan Semiconductor Manufacturing (NYSE:TSM) is an excellent example. It’s up nearly 70% in 2024 and is likely to charge higher prices to Nvidia and other leading firms that it supplies with chips.
Qualcomm (QCOM)
Qualcomm (NASDAQ:QCOM) stock has soared in 2024, rising by more than 53%. I like Qualcomm for its dividend, which helps smooth out the lows, but the company’s opportunity is about AI.
Qualcomm provides AI chips with strong end markets in the smartphone vertical and automotive sectors. The ongoing opportunity in the smartphone and automotive spaces is one of the strongest reasons to believe that Qualcomm can continue to rise higher.
Mizuho recently raised its target price for Qualcomm to $240, citing the utility of Qualcomm Snapdragon 8 gen 3 chips in AI-enabled handsets.
The markets continue to appreciate Qualcomm for its strength in the automotive sector. Revenues from the automotive sector grew by 35% during the most recent quarter. Based on Qualcomm’s growth during the period, it’s very fair to say that the company is taking advantage of the $45 billion design win pipeline.
Qualcomm stock likely will grow further in June.
NXP Semiconductors (NXPI)
NXP Semiconductors (NASDAQ:NXPI) is an excellent stock to invest in for those seeking exposure to the automotive sector chip opportunity.
Sales from within the automotive segment comprised more than $1.8 billion of the company’s nearly $3.13 billion quarterly revenues in Q1. Internet of Things (IoT) and mobile are the company’s next biggest revenue producers. However, those two segments combined produce roughly half the automotive segment’s sales. The point is that NXP Semiconductors is well positioned to grow on the presumed resurgence of the automotive industry, particularly electric vehicles.
That isn’t to suggest that NXP Semiconductors is currently suffering; it isn’t. Shares are up more than 21% this year.
One of the other important pieces of information about NXP Semiconductors is that the company is responsible. In the first quarter, the company lowered its overall debt by nearly $1 billion.
That fundamental improvement and the automotive opportunity make NXP Semiconductors a strong choice for those already owning Nvidia and AMD.
Super Micro Computer (SMCI)
Super Micro Computer (NASDAQ:SMCI) is essentially a chip stock, although the company does not primarily produce or sell semiconductors. Instead, it makes high-performance rack servers and storage solutions. Super Micro Computers’ sales are booming because they serve the thriving data center sector, which is, in turn, consuming massive quantities of chips. Therefore, I’ve chosen to include it as a chip stock.
Super Micro Computer is a compelling choice for investors who already own Nvidia and AMD. Investors simply need to look at the company’s forecasts to understand why. Revenues and per share earnings are both expected to more than double in 2024, and that opportunity is expected to continue into 2025 and beyond.
Super Micro Computer supplies enterprises that require high-powered rack solutions that integrate leading chips. It remains one of the better data center stocks to consider. The shares themselves continue to have a very strong upside.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
