The first half of 2023 has been highly profitable for semiconductor investors, with the benchmark iShares Semiconductor ETF (ticker: SOXX) up 45.2% through June 20. Meanwhile, the VanEck Semiconductor ETF (SMH) is up about 51% over the same period. Multiple growth drivers include artificial intelligence, virtual reality, 5G, cryptocurrencies, gaming and cloud computing, all of which are increasingly reliant on computer microchips.
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The Semiconductor Industry Association projects significant growth for the chip sector in the near future. “The latest industry forecast projects a double-digit dip in global chip sales for 2023, followed by a strong rebound in 2024,” says John Neuffer, SIA president and CEO. With semiconductors ascending, investors should focus on these seven stocks for the remainder of 2023:
| Stock | Year-to-date return as of June 20 |
| NXP Semiconductors NV (NXPI) | 25% |
| Qualcomm Inc. (QCOM) | 10.4% |
| Monolithic Power Systems Inc. (MPWR) | 44.6% |
| Intel Corp. (INTC) | 34.6% |
| Nvidia Corp. (NVDA) | 199.8% |
| Taiwan Semiconductor Manufacturing Co. Ltd. (TSM) | 40.9% |
| Advanced Micro Devices Inc. (AMD) | 83.6% |
NXP Semiconductors NV (NXPI)
NXP is already up 25% so far in 2023, but it still seems ready to pop as NXP’s revenue-generating sectors — most notably automotive and Internet of Things — are generating big demand for NXP chips. Electric vehicles are one potential area of strength for NXP, with Tesla founder Elon Musk stating he expects annual unit production numbers to rise from 1.3 million in 2022 to 20 million vehicles by 2030.
NXP is also reporting an estimated earnings growth rate of 8.2% in 2024, setting up a potentially profitable run for the stock in the next several years.
Qualcomm Inc. (QCOM)
Qualcomm has developed a nice turnaround story in 2023 as it has withstood lower revenues in the smartphone sector due to lower consumer demand. While mobile computing is in Qualcomm’s wheelhouse, the company is also generating momentum in the emerging artificial intelligence market.
Qualcomm was an early entrant in the AI sweepstakes, as it’s been developing AI-based chips for markets as diverse as smartphones, internet-connected devices and smart vehicles. QCOM stock has been rising in 2023 as mobile-phone demand rises and as AI chips are in robust demand.
A nice 2.7% dividend yield helps make Qualcomm a stronger case for growth-minded investors.
Monolithic Power Systems Inc. (MPWR)
At more than $500 per share, Monolithic Power is on the pricier side of the street for semiconductor investors, but its core strength — providing integrated power and power delivery architectures for chip manufacturers — makes it invaluable to the semiconductor sector. That’s a big reason why MPWR is on a genuine heater in 2023, with its share price rising nearly 45% in the first half.
First-quarter performance figures were well ahead of analyst expectations, with revenues up $451 million compared to $378 million for the same period a year earlier. As Monolithic Power picks up steam in high-profit sectors like storage and computing, communications and the automotive sector — where revenues rose a staggering 91% on a year-to-year basis — the path is clear for continued high returns in 2023.
Intel Corp. (INTC)
Intel is making news on the global expansion front in June, with announcements on a new $25 billion semiconductor plant in Israel and a $4.6 billion chip-testing site in Poland. And that wasn’t all Intel had up its sleeve. On June 19 the technology giant reached an agreement to spend $32.8 billion to build two new manufacturing facilities in Magdeburg, already dubbed Germany’s “Silicon Junction.” The public-private chip-manufacturing deals in all three countries point to an industry shift away from semiconductor facilities in China and Taipan, as relations between China and the West turn contentious.
It’s also a signal that Intel’s move into Europe should shore up the continent’s struggling supply chain operation, with more chips developed within European borders.
Intel shares are already up 34.6% in 2023, but there’s room for growth, as the massive chip-facility investments overseas build a ramp for long-term company growth in one of the most in-demand sectors on the planet.
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Nvidia Corp. (NVDA)
With its stock surging nearly 200% so far this year, Nvidia is the undisputed champion of the chip sector in 2023, and it largely has the huge demand for artificial intelligence chip solutions to thank for that. Nvidia’s growth has truly been monumental. Since 2009, the company’s market share has grown by 17,000% to over $1 trillion in 2023. In perspective, Intel’s market share growth over the same timeline stands at 20%.
Morgan Stanley chip analyst Joseph Moore tapped Nvidia as his top pick, citing the chip provider’s heavy investments in AI. “Frankly, the (AI) commentary around these markets is more positive than anything we have heard in 29 years of covering semiconductor stocks,” Moore said in a new research note.
Moore recently maintained an “overweight” rating on NVDA and raised his price target from $450 to $500, noting that the company is in an optimal position to stack cash in the short term.
Taiwan Semiconductor Manufacturing Co. Ltd. (TSM)
Despite all the hoopla over Nvidia’s share price run-up in 2023, it’s worth noting that Taiwan Semiconductor remains the largest semiconductor manufacturer in the world, making about 60% of the world’s chip supply. Most chip producers — even Nvidia — outsource their chip manufacturing to companies like TSM. So far in 2023, the manufacturing giant’s share price reflects that dominance. TSM stock is up 40.9% for the year.
With massive production capacity, technological prowess, huge commercial demand for semiconductors and a $530 billion market cap, Taiwan Semiconductor stands tall as a steady and reliable sector investment choice in 2023.
Advanced Micro Devices Inc. (AMD)
Advanced Micro Devices has a long way to go in displacing Nvidia as the largest AI-based chip supplier in the industry, but there’s a lot to like about AMD as it climbs closer to the top of the heap. In mid-June, the company rolled out its new Instinct MI300 series chips, which should accelerate generative artificial intelligence chip processing. Scheduled for release in 2024, AMD’s AI chips should make money before that.
“While lack of major customer announcements likely disappointed some, we believe AMD is working with multiple tier 1 customers and expect initial AI revenue from MI300 in Q4 2023,” Raymond James analyst Srini Pajjuri says in a new research note. While Nvidia claims approximately 80% of the AI chip market, AMD is coming on strong. The stock is up 83.6% for the year and shows few signs of slowing down.
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7 Best Semiconductor Stocks to Buy in 2023 originally appeared on usnews.com
Update 06/21/23: This story was previously published at an earlier date and has been updated with new information.
