As Nvidia’s (NASDAQ:NVDA) growth goes hyperbolic, the semiconductor industry seems left behind. After all, much of Nvidia’s excitement and value generation comes from its dominance in the graphic process unit sector of semiconductor technology. However, Nvidia is a fabless company. This means it relies on highly sophisticated manufacturers, which, in turn, rely on suppliers to produce the GPUs that drive Nvidia’s market dominance. With Nvidia’s growth looking unlikely to slow down, according to analysts, keeping an eye on where it spends its money could be lucrative. 

Furthermore, this means there’s money to invest in the supply chain that puts Nvidia’s products on the market. That’s because Nvidia is a rising tide, raising several stocks alongside it and bolstering the value of the S&P 500. As such, here are three semiconductor stocks to buy due to their close relationship with how Nvidia dominates the market.

Taiwan Semiconductor (TSM)

Nvidia’s premier partner in chipmaking, Taiwan Semiconductor (NYSE:TSM), has seen its value grow due to its relationship with Nvidia. Through its mastery of various semiconductor and microchip fabrication processes, TSM has become an asset to the tech industry beyond NVDA. 

Its reputation for exceptional quality, timeliness and efficacy has kept major firms returning for repeat orders worldwide. Of even higher importance, the company has continued to improve the nanometer size of its manufacturing offerings, going from seven nanometers to two in just five years. This is exceptionally important as the smaller the manufacturing process, the more transistors it can fit on a wafer, making the resulting chip more computationally powerful.

With this push for innovation, TSM remains on the leading edge of the semiconductor manufacturing industry, which keeps its customers coming back while recruiting new ones with novel technological designs.

Applied Materials (AMAT)

Among the critical web of suppliers to Nvidia’s product, Applied Materials (NASDAQ:AMAT) has continued to impress investors. Though its recent Q2 2024 earnings report saw minimal revenue growth year-over-year (YOY), the company rewarded shareholders with a boost to its earnings per share. Yet, this temporary slowdown in growth is more likely an aspect of AMAT waiting for demand to catch up to its supply.

Moreover, AMAT’s Applied Global Services division reported its 19th quarter of YOY revenue growth. This news came alongside another record quarterly revenue for the division, hinting at its importance to the company’s business model. That’s because the company’s 17,000 machines earn recurring revenues through maintenance fees like Taiwan Semiconductor at all of its customers. These maintenance services also boast a 90% contract renewal rate.

For investors looking for the best semiconductor stocks to buy, AMAT represents a strong position as a supplier and maintainer of the industry’s building blocks.

ASML Holding (ASML)

One of the biggest innovators in chipmaking technology, ASML Holdings (NASDAQ:ASML) specializes in the extreme engineering needed to create nanometer-level manufacturing. The company commands the market for photolithography machines by continuously pushing the edges of what is physically possible in semiconductor manufacturing.

Specifically, the company’s newest machine, the high-NA extreme ultraviolet system, is proving to be a strong revenue opportunity. For example, ASML recently confirmed selling and shipping a $380 million high-NA extreme ultraviolet machine to TSMC. This machine allows for transistor lines of the highest precision to be printed onto semiconductor boards, further cementing its importance to the industry’s future as the push to get smaller and more powerful processors forces its necessity.

Furthermore, some analysts are predicting another $6.13 billion in the remaining three quarters of 2024, which could push ASML’s sales to $43 billion for the year. This would mark a 48% increase over 2023’s full-year sales of $29 billion.

On the date of publication, Viktor Zarev 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.