In tech investments, semiconductor stocks remain a cornerstone of growth and innovation. As the market delves into July 2024, identifying the top performers in this sector becomes crucial to having stable returns and strategic growth opportunities.
Ongoing tech advancements like AI and the related pulse of global economic trends magnify semiconductor stocks’ valuation. The first company stands out with its aggressive node completion strategy and groundbreaking product releases, reinforcing its market dominance. The second one, navigating through a nuanced demand environment, showcases resilience with meticulous inventory management and robust financial metrics.
Meanwhile, the third company has an edge in semiconductor manufacturing equipment. It holds substantial revenue growth and strategic investments. Learning about these companies’ strategic maneuvers and fundamental progress can help them capitalize on the semiconductor industry’s growth trajectory. Here, the focus is on each company’s technological innovations, market strategies and financial fundamentals.
Intel (INTC)
Intel (NASDAQ:INTC) leads semiconductor manufacturing by designing and producing microprocessors. The company focuses on completing the five nodes in four years. This goal demonstrates the company’s rapid technological advancement. Intel has the fundamental ability to innovate and regain process leadership. The production ramp of Intel 20A and the anticipated production ramp of Intel 18A in H1 2025 highlight significant market leads. The introduction of high-NA EUV technology with Intel 14A further solidifies Intel’s tech leadership.
Moreover, product releases such as Arrow Lake, Meteor Lake and Panther Lake, along with the lead products Clearwater Forest and Panther Lake, emphasize a robust product roadmap. Intel’s capability to double AI PC CPU units sequentially in Q2 2024 and exceed the original 40 million AI PC CPU target for the year indicates strong market demand and execution capability. Intel Foundry Services (IFS) generated $4.4 billion in revenue in Q1 2024, focusing on establishing a foundry relationship between Intel Products and Intel Foundry. This new operating model aims to optimize cost structures and improve profitability.
Overall, Intel’s strategic focus on next-generation nodes and AI-driven processors positions it among the top semiconductor stocks to buy.
NXP Semiconductors (NXPI)
NXP Semiconductors (NASDAQ:NXPI) prevails in high-performance mixed-signal semiconductor solutions. The company may benefit in Q2 2024 with industrial and Internet of Things (IoT) market growth of a high single-digit percent range annually and sequentially. It is driven by improving demand in China. Meanwhile, the mobile market is expected to be in the low 20% range annually and about flat sequentially, indicating a modest cyclical recovery.
Moreover, NXP plans to stage slightly higher inventory in the channel during Q2 2024 to support competitiveness for anticipated second-half growth. The guidance assumes approximately 1.7 months of distribution channel inventory exiting Q2. NXP’s Q1 2024 financial performance was solid. The revenue aligns with guidance, with a gross margin of 58.2% and a solid operating margin of 34.5%. The company’s sharp cost management and operational edge contributed to these positive results. Indeed, NXP remains focused on its long-term financial model, maintaining gross margins at or above the high end of the range and managing internal fab utilization levels in the low 70s. As a result, the company’s disciplined approach to cost management and strategic investments may yield prolonged profitability and growth.
To sum up, NXP’s strong presence in high-growth markets and disciplined financial performance make it a standout among semiconductor stocks to buy.
ACM Research (ACMR)
ACM Research (NASDAQ:ACMR) edges on advanced wafer processing solutions and equipment for semiconductor manufacturers. The company’s financial health points to its strong cash position. ACM Research ended the quarter with over $288 million in cash. Indeed, this robust cash reserve gives the company the financial flexibility to invest in new tech processes, expand production capabilities and counter-economic uncertainties. ACM Research hit first-quarter shipments of $245 million, a 175% annual increase. Specifically, this surge in shipments indicates solid, increasing client demand. With that, the company has scalability and supply chain efficiency.
Further, the revenue from ACM’s single wafer cleaning, Tahoe, and semi-critical cleaning products grew by 199% in Q1, representing 72% of the total revenue. The company’s comprehensive cleaning portfolio, which supports nearly 90% of all cleaning processes in SAPS for memory and logic devices, positions it as a leader in this market segment. Moreover, introducing advanced products such as the high-temperature single-wafer SPM tools and the ULTRA C v Vacuum Cleaning Tool further enhances its competitive edge.
To conclude, ACM Research’s lead in critical semiconductor manufacturing equipment makes it a top mark among semiconductor stocks to buy.
As of this writing, Yiannis Zourmpanos held long positions in INTC and ACMR. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
