With the artificial intelligence (AI) story still heating up, buy semiconductor stocks on the cheap. For one, after a massive tech pullback, many are now dirt cheap, including Nvidia (NASDAQ:NVDA), which is just starting to regain lost momentum.
Two, with the AI boom heating up, Precedence Research says the semiconductor global market could be worth about $1.13 trillion by 2033 from $544.8 billion in 2023.
Three, many of the top semiconductor companies are posting incredible sales growth. Taiwan Semiconductor (NYSE:TSM), for example, just said July revenue soared nearly 45% higher thanks to growing demand for its AI chips. It also said net revenue for its second quarter jumped nearly 33% to $20.82 billion.
Better, with substantial demand for semiconductors for the auto, data center, AI, 5G, 6G and the Internet of Things markets expected to rocket, you really can’t go wrong betting on hot semiconductor stocks.
Some of the hottest semiconductor stocks to buy now include the following.
Taiwan Semiconductor (TSM)
The last time I mentioned Taiwan Semiconductor, I said it “recently caught support at its 100-day moving average, but it’s also oversold according to RSI, MACD and Williams’ %R. From its last traded price of $153.59, it could refill its bearish gap at around $180 a share.”
That was on July 29. Today, it’s up to $172.34 and could push even higher. For one, as noted above, July sales soared 45%. Two, recent earnings growth was impressive and is only expected to improve with chip demand. We also have to consider that TSM manufactures about two-thirds of global semiconductors and circuitry.
Moving forward, earnings are only expected to improve. In fact, as noted by Chairman and CEO C.C. Wei, “Moving into third quarter 2024, we expect our business to be supported by strong smartphone and AI-related demand for our leading-edge process technologies,” as quoted by Seeking Alpha.
Advanced Micro Devices (AMD)
Another one of the hottest semiconductor stocks to buy is Advanced Micro Devices (NASDAQ:AMD).
Last trading at $141.13, it’s still oversold. It’s also just starting to pivot from over-extensions on RSI, MACD and Williams’ %R. From here, I’d like to see AMD initially refill its bearish gap at around $180 a share. Longer-term, I’d like to see it challenge $210 again.
Helping, analysts at Wells Fargo (NYSE:WFC) just raised their price target on AMD to $205 with an Overweight rating. As noted by TheFly.com, “Wells Fargo views AMD’s $665M all-cash acquisition of Silo AI, the largest private AI lab in Europe as a positive tactical and strategic move focused on deepening AMD’s internal open-source AI software expertise.”
Even better, Piper Sandler (NYSE:PIPR) just said recent losses could offer a “tremendous opportunity” for investors, thanks to the AI boom.
Plus, earnings haven’t been too shabby.
Second-quarter revenue of $5.84 billion beat by $120 million. Earnings per share of 69 cents beat by a penny. And moving forward, it expects to post third-quarter revenue of $6.7 billion at the mid-point, above expectations of $6.61 billion.
Direxion Daily Semiconductor Bull 3x Shares (SOXL)
Or, if you’d rather diversify on the cheap, there’s the Direxion Daily Semiconductor Bull 3x Shares (NYSEARCA:SOXL). After bottoming out at around $23.50, SOXL is also starting to pivot from over-extensions on RSI, MACD and Williams’ %R as well. From its last traded price of $35.28, I’d like to see the ETF initially retest $45 a share.
With an expense ratio of 0.92%, the ETF seeks daily investment results of 300% of the performance of the NYSE Semiconductor Index, as noted by Direxion.com. Some of its top holdings include Broadcom (NASDAQ:AVGO), Nvidia, Advanced Micro Devices, Applied Material (NASDAQ:AMAT) and Qualcomm (NASDAQ:QCOM) to name just a few of its 31 holdings.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned. 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.
