There’s no stopping semiconductors in 2024, with the most recent monthly global sales figures showing a 20.6% boost compared with the same period in 2023, according to the Semiconductor Industry Association.
Those were the highest sales recorded by SIA for the month of August, after increases for five consecutive months. Regionally, semiconductor sales were off the charts, rising 43.9% year over year in the Americas, SIA notes. The China and Asia/Pacific markets performed solidly on the chip sales front as well, growing 19.2% and 17.1%, respectively, over the same period.
[Sign up for stock news with our Invested newsletter.]
Rising sales usually translate into rising stock prices for the semiconductor sector, and the fourth quarter of 2024 should be no different. Which stocks offer the best opportunity for gains right now? These sector names should fit the bill:
| Semiconductor Stock | Implied Upside* | YTD return |
| Nvidia Corp. (NVDA) | 31.7% | 168.4% |
| Advanced Micro Devices Inc. (AMD) | 8.8% | 17.2% |
| Taiwan Semiconductor Manufacturing Co. Ltd. (TSM) | 10.2% | 80.9% |
| Synopsys Inc. (SNPS) | 25.6% | 0.6% |
| Arm Holdings PLC (ARM) | -6.0% | 91.1% |
| Intel Corp. (INTC) | 8.8% | -53.0% |
| Qualcomm Inc. (QCOM) | 28.7% | 16.7% |
*Based on Wall Street analysts’ 12-month price target and share price as of Oct. 8.
Nvidia Corp. (NVDA)
What’s left to be said about Nvidia, the Kansas City Chiefs of Wall Street? The stock is up 29.2% in the past month and 168.4% year to date. Oh, and over the past five years? NVDA is up 2,913.4%, making it one of the greatest success stories in stock market history.
More recently, the company is staking out new ground on the AI side of the chip market, where industry stock prices were down 6% in the third quarter of 2024. But historically, semiconductor stocks have recuperated in the fourth quarter of the year as companies lay out their post-Jan. 1 budgets with plenty of room for chip spending. Those spending figures could rise even further in early 2025, as companies earmark more cash for AI training, an area where Nvidia excels.
Analysts don’t seem to think NVDA has lost any luster. Cantor Fitzgerald recently reissued a “buy” rating on the stock with a one-year price target of $175. NVDA stock is currently trading around $133 per share.
Advanced Micro Devices Inc. (AMD)
AMD is trading at $172.80 per share as of the Oct. 8 market close, up 17.2% year to date. A good chunk of the rise is attributed to enthusiasm over the company’s AI processors, especially for AI data center markets.
The Santa Clara, California-based company is fortifying its burgeoning AI data center brand with the August purchase of Silo AI for $665 million. The European private artificial intelligence lab specializes in AI systems and solution development for companies.
AMD followed that move with plans to purchase ZT Systems for $4.9 billion. ZT Systems is a computer hardware design company that pairs well with AMD for system design and development needs.
Like Nvidia, AMD is riding the semiconductor wave after a stellar Q3 sales performance. Expect that wave to strengthen, as World Semiconductor Trade Statistics sees worldwide chip sales rising to $611 billion through 2024, representing a 16% increase from 2023. WSTS also expects global semiconductor sales to rise another 12.5% in 2025.
Taiwan Semiconductor Manufacturing Co. Ltd. (TSM)
Taiwan Semiconductor’s client list is a “who’s who” of the tech sector, with big brands like AMD, Apple Inc. (AAPL), Arm Holdings PLC (ARM), Broadcom Inc. (AVGO), Marvell Technology Inc. (MRVL), MediaTek Inc. (2454.TW), Qualcomm Inc. (QCOM) and Nvidia counting on Taiwan Semi to make their chips.
The stock is currently in recovery mode, rising 19.1% in the past month, a dramatic improvement over its flat performance over the past three months.
Some positive earnings estimates from analysts have boosted recent share growth. The company will be reporting Q3 earnings on Oct. 17, which is expected to show earnings per share of $1.74, catapulting earnings by 34.9% on a year-to-year basis. Revenue is also expected to climb by 31.5% to $22.7 billion.
Percolating in the background is a reported deal between TSMC and Samsung Electronics Co. Ltd. (005930.KS) to build a semiconductor mega factory somewhere in the Middle East, possibly in the United Arab Emirates, as first reported by the Wall Street Journal. The manufacturing deal would likely cost over $100 billion and create a new geographical power center in the chip development market.
Synopsys Inc. (SNPS)
Sunnyvale, California-based Synopsys is lagging, with its share price down 15.9% over the past three months as of Oct. 8. But there’s a lot to like about the company’s future prospects.
Synopsys, which provides electronic design automation software and semiconductor intellectual property used in chip design and manufacturing, beat earnings estimates in August. Year over year, the company saw a 27% rise in earnings while sales grew by 13%.
The chip designer finds itself in a strong position heading into 2025. Its advanced silicon chips are in robust demand by high-end chip customers engaged in AI, the Internet of Things (IoT) and 5G mobile networks.
Maybe that’s why SNPS management anticipates 2024 earnings to gain 15% on a year-to-year basis, which represents a new high for the company. Company insiders point to rising demand for shorter chip design and testing cycles while revolutionary but complex technologies like AI need highly advanced semiconductors to operate at full force. Synopsys meets those needs on both fronts and should be a solid chip stock for years to come.
Arm Holdings PLC (ARM)
U.K.-based Arm Holdings is starting to cool off after a white-hot initial public offering last September, but the stock has gained about 165% over the past year. While Arm shares are up 91.1% on a year-to-date basis, the stock is down 22.3% in the past three months.
The company enjoys close ties with industry heavyweight Nvidia, which tried to buy Arm Holdings in its IPO run-up but was blocked by regulators. Even so, Nvidia remains a big investor in Arm, and the chip-technology developer also counts Amazon.com Inc. (AMZN), Alphabet Inc. (GOOG, GOOGL) and Microsoft Corp. (MSFT) as customers.
It’s rare to see a new IPO run with the big dogs, but that’s what Arm is doing in late 2024. The company’s chip designs are used in 99% of higher-end smartphones. Now, the company is moving beyond smartphones and into other industries like cloud computing and the auto sector. With revenues expected to rise by over 20% annually through 2027, Arm could be a smart choice for investors wanting to enter the chip sector at a nice price break.
Intel Corp. (INTC)
Intel finally emerged from its year-long funk in September, with its share price rising by 23.5% over the past 30 days, mainly due to attractive development contracts and signs of strategic stability.
The company has been the subject of rumors that it’ll be bounced out of the Dow 30, with added buzz about a proposed takeover that appears unfounded. Intel also laid off 15,000 staffers in Q3, which didn’t help dampen the rumors, and its plunging market share due to bad management decisions only added more fuel to the fire.
Yet Intel’s commitment to morph into a third-party chip manufacturing foundry and accelerate efforts to design and produce its own chips is finally opening eyes on Wall Street. While Intel remains in “prove it” mode as it looks to right the ship, the company just landed $3 billion in direct funding under the CHIPS and Science Act for a collaboration with the U.S. Department of Defense, giving the company a much-needed leg up from Uncle Sam.
It will take more than that to propel Intel to new heights, but the chip producer has turned a corner in Q3, hopefully with fewer impediments to its continued growth. Additionally, analysts see Intel pivoting to earnings growth next year, following years of declining earnings.
Qualcomm Inc. (QCOM)
San Diego-based Qualcomm is having a solid 2024, with its stock price up 16.7% year to date, though it’s trailing the S&P 500 so far. The company’s Q3 earnings also bested analyst estimates, and it offers a nice 2% dividend yield.
The company has a solid growth forecast, an expanding AI chip brand and an appealing valuation for deal-minded investors. QCOM’s recent share price dive was more likely due to a chip sector pullback than to any internal problems. Its Snapdragon processors are flying off shelves, and the company continues to expand beyond smartphones into other developing semiconductor markets like auto, IoT and AI-powered computers.
No less than 20 of 21 analysts covered by TipRanks view QCOM as a buy or a hold. The consensus target price is $214.13 per share as of Oct. 9, a potential upside of 29%.
More from U.S. News
7 Best Semiconductor ETFs to Buy in 2024
7 Best Tech ETFs to Buy in 2024
6 Best Biotech Stocks to Buy for 2024
7 Best Semiconductor Stocks to Buy in 2024 originally appeared on usnews.com
