The first half of 2024 has been kind to semiconductor investors, with the benchmark iShares Semiconductor ETF (ticker: SOXX) up 25.5% year to date as of June 7. Despite a slowdown in the spring, global semiconductor sales increased 15.8% year over year in April and 1.1% on a monthly basis, according to the Semiconductor Industry Association. The World Semiconductor Trade Statistics group forecasts global sales growth of 16% in 2024 and 12.5% in 2025.
Sector trackers point to U.S. export control measures on artificial intelligence chips to the Middle East as creating headwinds. The move has hit semiconductor stocks in recent months, with major sell-offs in funds like SOXX and the VanEck Semiconductor ETF (SMH). The move is billed as temporary, as Uncle Sam conducts a regional and national security review of artificial intelligence development in places such as United Arab Emirates and Saudi Arabia.
[Sign up for stock news with our Invested newsletter.]
The AI chip restriction has negatively impacted big sector names like Nvidia Corp. (NVDA) and Advanced Micro Devices Inc. (AMD), both of which have major AI investments in the Middle East. The regional military conflict between Israel and Hamas-led Palestinian militant groups has also pulled the semiconductor market back in 2024.
Even so, the global semiconductor market’s underlying fundamentals remain robust, and most sector analysts expect the chip market to rebound in the second half of 2024. Data from Gartner cites the rise of artificial intelligence and demand for old relabels like personal computers and cell phones to drive semiconductor growth to 16.8% for all of 2024.
Here are the leading semiconductor stocks to focus on in 2024:
| Semiconductor Stock | YTD Return as of June 7 |
| NXP Semiconductors NV (NXPI) | 18.9% |
| Qualcomm Inc. (QCOM) | 44.2% |
| Monolithic Power Systems Inc. (MPWR) | 19.4% |
| Taiwan Semiconductor Manufacturing Co. Ltd. (TSM) | 58.7% |
| Nvidia Corp. (NVDA) | 144.1% |
| On Semiconductor Corp. (ON) | -13.4% |
| Advanced Micro Devices Inc. (AMD) | 13.9% |
NXP Semiconductors NV (NXPI)
Like several big industry stocks, NXP Semiconductors has made impressive gains for the year but has seen a growth slowdown in the past three months. NXPI shares are up 18.9% for the year, with momentum moderating by the end of May.
NXP is seeing underperformance in the automotive market, one of its biggest revenue-generating sectors. In the most recent quarter, revenue fell 1% on a year-to-year basis as weaker demand for new vehicles (especially electric models) weighed heavily on auto company bottom lines. In a recent study by Deloitte, only 11% of auto consumers wanted to buy either a plug-in hybrid or battery electric vehicle for 2024, creating a major setback for the auto industry and for companies like NXP, which rely on strong auto sales to drive semiconductor demand.
The Dutch company made up the loss with a 14% revenue gain in the industrials and smart devices segments and a 34% rise in mobile device chip sales for the recent quarter. Helping matters further was an upgrade to “buy” from Mizuho Securities in late May. NXP’s 1.5% dividend yield should further pacify skittish investors.
Qualcomm Inc. (QCOM)
This San Diego-based semiconductor company continues to shine, as it’s up 44.2% on a year-to-date basis and offers a dividend yield of 1.7%.
The company benefits from its perch as one of the largest wireless device makers in the world, and its processors are used by just about every big handset manufacturer in the industry. The wireless charging market is expected to expand to $16 billion by 2029 from $6.4 billion in 2024, according to MarketsandMarkets Research. Analysts see potential for Qualcomm to benefit as its reach expands in China and as PCs move from x86 to Arm architectures, according to TipRanks.
Despite some sour shorter-term projections for the wireless market due to the economy, Qualcomm seems to be in good shape, especially for when smart device buyers wade back in. Qualcomm reported strong quarterly numbers on May 1, with adjusted revenues of $9.4 billion and earnings per share of $2.44 both beating analyst expectations, and handset sales rising 1% on an annual basis after a post-pandemic lull.
Monolithic Power Systems Inc. (MPWR)
This Kirkland, Washington-based semiconductor’s share price was up only 2.4% from the end of February through May. Monolithic’s shares have risen 20.7% for the year, giving investors some solace, but higher operating costs and a weaker semiconductor market have done the company no favors so far in 2024.
Still, Monolithic has proven to be a reliable performer on a quarter-to-quarter basis, and revenues continue to climb (to $457.9 million in the first quarter of 2024, which is $13 million clear of analyst expectations). The company is well established in the high-flying enterprise data center (with sales up 217% over the past year), high-end cloud computing and e-commerce sectors. It’s also attached to low-flying industries, such as the automotive, manufacturing and telecommunications segments, where business is drying up in 2024.
The latter scenario won’t last forever. Monolithic’s reputation as a lower-cost and in-demand semiconductor developer, along with its 0.7% dividend yield, should keep it afloat until companies start digging deep for semiconductor deliveries again. A market capitalization of $37 billion and deep cash reserves should help that process along.
[Is Gold a Good Investment Right Now?]
Taiwan Semiconductor Manufacturing Co. Ltd. (TSM)
Taiwan Semiconductor has an advantage its big-brand competitors can’t claim; it’s the largest chip producer for other semiconductor providers. Tackling the nuts and bolts component of the chip-making process and selling the technology to companies like Nvidia, Apple Inc. (AAPL) and AMD is big business. Doing so resulted in $71 billion in revenue in the past year and $27 billion in net profit.
That’s only one reason why TSM shares have risen 58.7% in 2024 as of June 7. Perched atop the semiconductor manufacturing leaderboard, TSM is a big beneficiary of a semiconductor industry expected to grow from $526.7 billion last year to $1.4 trillion by 2032. With the rise in remote work and the emergence of artificial intelligence, TSM is uniquely positioned to take advantage of the burgeoning demand for semiconductors over the next decade.
The company is also building new chip fabrication centers in the U.S., Germany and Japan over the next several years, which should solidify Taiwan Semiconductor as a chip champion for the long haul. Add a 1.5% dividend payment, and it’ll be no surprise when more investors are all in on TSM.
Nvidia Corp. (NVDA)
Nvidia continues to outperform in 2024, with its share price rising 144% year to date as of June 7, and by a stellar 33.5% over the last month alone.
On June 3, Nvidia CEO Jensen Huang rolled out plans for new artificial intelligence accelerator chips, with the company’s new Blackwell Ultra chips next year and a new Rubin AI product line following in 2026. That’s been the Nvidia playbook in recent years, with the company bringing new chips to the market in 2020 (Ampere) and 2022 (Hopper). Huang told the audience that the emphasis on AI chips is critical at this week’s Computex technology conference in Taipei, Taiwan. Nvidia plans to keep lowering the price tag on AI tech, which has worked out superbly for the company and its shareholders.
With Nvidia’s new chip speeds rising significantly while keeping power consumption down, the chip provider is changing the game for its customers, who can’t afford to sit on the sidelines with AI surging and companies investing heavily in the technology. “Accelerated computing is sustainable computing,” Huang said in his speech. “The more you buy, the more you save.”
On Semiconductor Corp. (ON)
On Semiconductor is wobbling along in 2024, with its share price down 13.4% through June 7 and down 10.9% since March 1.
While the company bested analyst expectations in the first quarter, OnSemi delivered negative quarterly earnings in five consecutive quarters, while sales landed in negative territory three quarters in a row. A big — and likely only temporary — problem is On’s close attachment to sluggish industries such as automotive and industrials. Demand is down for products such as autos, steel and cement, as economic activity wanes and consumers and businesses spend less in 2024.
Historically, the economy has only kept industrial automation, energy usage and auto manufacturing down temporarily, as all of the above are reliable revenue producers for the long run. That benefits OnSemi, which manufactures power, analog semiconductors and sensor chips for big industry players in the automotive and industrial realm.
For now, On is seeing high demand for its silicon carbide SiC-class chips. On already holds a 25% market share in SiC chips, and its new South Korean SiC manufacturing center should produce 1 million units annually.
Even with a downgraded estimate of SiC chip growth of up to 30% in 2024, On is building a solid foundation in the silicon carbide side of the chips industry and thus deserves investors’ attention for the rest of the year.
Advanced Micro Devices Inc. (AMD)
Like On, AMD has fallen backward recently, with its stock returning a comparatively low 13.9% this year through June 7. AMD is fighting back, however, especially with CEO Lisa Su’s announcement at Computex that the chip supplier’s MI325X data center accelerator will roll out in the fourth quarter, the MI350 chip series will follow in 2025, and the MI400 is due out in 2026. Along with its two-year AI chip plan, Su also announced that AMD will introduce new AI processors for personal computers in July. Lu said the AI chips fit especially well with Microsoft’s new CoPilot+ PCs, which will hit the marketplace later this month.
Company revenues rose by 2% sequentially in the first quarter, while client segment chip revenues soared by 85% year over year. Both numbers suggest a turnaround for AMD, likely sooner than investors think.
More from U.S. News
Can AI Pick Stocks? A Look at AI Investing
The Indian Stock Market: How to Invest in the World’s 5th-Largest Economy
What Is Par Value for Stocks and Bonds?
7 Best Semiconductor Stocks to Buy in 2024 originally appeared on usnews.com
Update 06/10/24: This story was previously published at an earlier date and has been updated with new information.
