If you want to beat the stock market, top semiconductor stocks are the best things you can buy. These equities represent companies that are making dynamic changes to our everyday lives and leading a technological revolution.
Top semiconductor stocks carry the stock market to new highs because of their important role in industries and technologies. Semiconductors are critical components in nearly all electronic devices, including smartphones, gaming consoles, electric vehicles and high-performance computers.
Semiconductors are also critical for advancing some of the most exciting technological developments today, such as machine learning, the Internet of Things, and generative artificial intelligence.
We’re using the Portfolio Grader to identify some of the best semiconductor stocks in the market today. From megacap stocks to some smaller companies, each of these firms are showing tremendous promise in the semiconductor industry.
Nvidia (NVDA)
Nvidia (NASDAQ:NVDA) has long been one of the best — if not the best — semiconductor stocks you can buy. The stock is up 770% in the last two years and 198% over the last 12 months.
That comes on the strength of its amazing growth — quarterly revenue is up 262% from a year ago to $26 billion, and earnings per share of $6.12 up 629% from last year. Nvidia’s incredible growth is a result of its position as the top supplier of high-end semiconductors that are vital for generative AI and other top applications.
But here’s something interesting — NVDA stock growth is starting to slow. The stock is up 15% in the last month — a good return, but slower than the company has seen in several quarters. And its even seen a 3% drop in the last couple of weeks.
Cause for concern? Not really. While Nvidia will start facing stiffer comparable numbers, the stock is expected to continue to grow as the need for GPUs increases. Morgan Stanley and Truist analysts are among those who recently raised their price targets on NVDA stock.
I’m still bullish on Nvidia, and you should be as well. NVDA stock gets an “A” rating in the Portfolio Grader.
Taiwan Semiconductor Manufacturing (TSM)
Taiwan Semiconductor Manufacturing (NYSE:TSM), otherwise known as TSMC, is closely associated with Nvidia and other semiconductor stocks. It is the top semiconductor manufacturer, building the actual products for Nvidia and many other top companies.
TSMC has a massive 61% market share in the global semiconductor foundry market. Demand for its services is increasing as companies such as Nvidia design more powerful chips for TSM to produce.
TSM also has a massive advantage in the Chinese market. According to Reuters, chip companies in China are designing less powerful processors specifically so they can retain TSMC as a chip producer.
Earnings for the first quarter included revenue of $18.87 billion, up 12.9% from a year ago. When it issues Q2 results on July 18, the company is expected to provide revenue between $19.6 billion and $20.4 billion.
TSM stock is up 74% this year and gets a “B” rating in the Portfolio Grader.
Broadcom (AVGO)
Broadcom (NASDAQ:AVGO) is a semiconductor company whose products are most often used for data centers, networking, storage, software, wireless and industrial products.
The stock is on a tremendous run this year as its acquisition of VMware seems to be a huge success. The purchase gave Broadcom access to VMware’s hybrid cloud platform, which provides corporate customers with the power of a cloud network with data centers on site. Broadcom also uses Nvidia GPUs to let its customers run AI models, which is critically important for many companies.
Revenue in the second quarter was $12.4 billion, up 43% from a year ago. It issued full-year guidance for revenue of $51 billion.
In addition, Broadcom is conducting a 10-for-1 stock split after markets close on July 11, which will bring the stock price to roughly $170 per share, which is much easier for investors without access to fractional shares and those wishing to trade options in AVGO stock.
Broadcom shares are up 54% this year. It gets a “B” rating in the Portfolio Grader.
Micron Technology (MU)
Micron Technology (NASDAQ:MU) makes products for memory and storage technologies, including DRAM, NAND and NOR technology.
It also rolled out a new chip to operate AI applications in Lenovo (OTCMKTS:LNVGY) laptops. The chip will be used in Lenovo’s ThinkPad P1 Gen 7 laptops.
But perhaps most impressively, Micron makes the world’s leading High-Bandwidth Memory 3E, or HMB3E, architecture that provides higher bandwidth that previous generations of memory. It also is smaller and uses less energy. Nvidia uses the HBM3E architecture in its latest graphics processing units, including the new H200.
Earnings for the fiscal third quarter of 2024 included revenue of $6.8 billion versus $3.75 billion in the same quarter a year ago. The company posted earnings per share of 30 cents versus an EPS loss of $1.73 in the same quarter a year ago.
MU stock is up 59% this year and gets a “B” rating in the Portfolio Grader.
Applied Optoelectronics (AAOI)
Applied Optoelectronics (NASDAQ:AAOI) is nowhere close in size to the previous companies on this list. It sports a market capitalization of only $318 million, compared to roughly $3 trillion for Nvidia.
But this is still a top-rated semiconductor stock. The Texas-based company makes and supplies fiber-optic networking products, including diode lasers, photodiodes, subassemblies and more. Its customers are in China, Taiwan and the U.S.
Applied Optoelectronics’ products are used in data centers and telecom products. It’s also a new member of the Russell 3000 index, which is a listing of the 4,000 biggest U.S. stocks by market capitalization. The inclusion means that AAOI stock will be used in exchange-traded funds and other products that track the Russell 3000.
Revenue in the first quarter was $40.6 million, down from $53 million a year ago. But notably, the company’s data center revenue increased from $20.3 million to $28.9 million, and that’s where the future growth of AAOI lies. The company saw a huge drop in cable TV revenue, which fell from $27.7 million to $8.7 million.
AAOI will need to continue to grow its lucrative data center business. The stock can be had for a discount right now, down 56% in 2024, and gets a “B” rating in the Portfolio Grader.
AXT (AXTI)
AXT (NASDAQ:AXTI) is even smaller than Applied Optoelectronics, sporting a market cap of only $150 million. The company makes high-performance compound and single element semiconductor substrate wafers comprising indium phosphide, gallium arsenide and germanium) that are used when a typical silicon wafer substrate cannot meet the performance requirements of a semiconductor or optoelectronic device.
Its products are used in 5G infrastructure, data center connectivity, passive optical networks, LED lighting, lasers, sensors, power amplifiers for wireless devices and satellite solar cells.
AXI is also a perfect example of why you should review your portfolio often. Because just four months ago AXI carried an “F” rating in the Portfolio Grader as earnings were down. But as the semiconductor market, which was stagnant for products like EVs and solar panels, shows new signs of life, AXT stock is rebounding nicely.
Earnings for the first quarter exceeded the company’s guidance for revenue and profitability. Revenue was $22.7 million versus $19.4 million in the same quarter a year ago. The company posted an operating loss of $2.5 million, compared to a loss of $3.5 million in Q1 2023.
The company is also preparing to list its subsidiary, Beijing Tongmei Xtal Technology Co., on the Shanghai Stock Exchange. When that listing is approved it will be another boon to AXTI stock.
AXTI stock is up 43% in 2024 and gets a “B” rating in the Portfolio Grader.
Applied Materials (AMAT)
Applied Materials (NASDAQ:AMAT) provides services and software needed to manufacture semiconductor chips that are used for computers, smartphones, televisions and solar products. It’s the Applied is the biggest U.S.-based supplier of semiconductor manufacturing equipment.
The company is seeing increased demand for its products as the AI, Internet of Things, electric vehicle and clean energy markets grow. And while AI chips continue to be in high demand, automotive, personal computers and smartphones are expected to be bigger customers for new chips in the second half the year.
Revenue in the second quarter of fiscal 2024 was $6.64 billion, up slightly from $6.63 billion a year ago. But AMAT stock has a lot of momentum right now, up 50% in 2024, and gets a “B” rating in the Portfolio Grader.
On the date of publication, Louis Navellier and the InvestorPlace Research Staff member primarily responsible for this article both had LONG position(s) in NVDA. Neither Louis Navellier nor the staff member had (either directly or indirectly) any other 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.
