The semiconductor sector just keeps rolling in late 2024, with $166 billion in global semiconductor sales in the third quarter, according to a report from the Semiconductor Industry Association. That’s 23.2% higher than the same quarter in 2023 and 10.7% higher than the second quarter of 2024.
September’s numbers were particularly eye-popping, with chip sales hitting $17.2 billion in the Americas, a 46.3% rise compared with the prior-year period, and China’s chip sales increasing by 22.9%, to $16 billion.
That said, growth in the immediate future looks relatively modest for the semiconductor industry. Data from Gartner shows that global semiconductor revenues will grow 14% in 2025, reaching $717 billion, but that’s a slowdown from the 19% growth rate for 2024.
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Still, slower growth that tops most other corporate sectors is enough to give investors the green light to steer portfolio cash into the semiconductor industry. Under-supply issues in the NAND flash memory (non-volatile storage technology) and DRAM (dynamic random-access memory) channels should relieve bottlenecks. Meanwhile, graphics processing unit, or GPU, chips used to train artificial intelligence models remain a burgeoning area, with revenues estimated to rise 27% in 2025, according to Gartner.
That all spells continued growth for the semiconductor industry and bodes well for the companies that make, service and ship chips worldwide. These seven sector stocks, in particular, should continue to shine heading into 2025:
| Semiconductor Stock | Implied Upside* | YTD return as of Nov. 20 |
| Nvidia Corp. (NVDA) | 19.9% | 194.6% |
| Advanced Micro Devices Inc. (AMD) | 34.4% | -6.7% |
| Taiwan Semiconductor Manufacturing Co. Ltd. (TSM) | 27.4% | 82.8% |
| Synopsys Inc. (SNPS) | 23.8% | 5.2% |
| Arm Holdings PLC (ARM) | 11.4% | 77.9% |
| Intel Corp. (INTC) | 2.8% | -51.5% |
| Qualcomm Inc. (QCOM) | 62.1% | 8.4% |
*Based on Wall Street analysts’ 12-month price target and share price as of Nov. 20.
Nvidia Corp. (NVDA)
Nvidia released third-quarter earnings on Nov. 20, which included a 94% revenue boost in the past year. Industry analysts are particularly interested in AI-powered chip revenues, and Nvidia boasts a 90% global AI chip market share. Any downward deviation would be concerning for NVDA share growth.
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. As the Gartner data implies, those spending figures could rise even further in early 2025, as companies earmark more cash for AI training, an area where Nvidia excels.
Data center growth, a mainstay division for Nvidia, also continues to dominate, with segment revenue growth doubling to a whopping $30.8 billion. Gaming revenue is also up, albeit at a slower growth rate.
Sector analysts remain firmly on board with NVDA, with Loop Capital holding its “buy” rating on the stock with a $175 price target. Meanwhile, Softbank CEO Masayoshi Son recently called NVDA shares undervalued ($145.93 per share on Nov. 20).
Advanced Micro Devices Inc. (AMD)
This Santa Clara, California-based chip company is perhaps Nvidia’s strongest competitor in the GPU market. It’s also the world’s second-largest x86 CPU producer, behind Intel.
Unlike Nvidia, AMD’s stock has stalled in late 2024, with its share price down 6.7% year to date and down 11.8% over the past month. Yet AMD has a lot going for it right now. Its two-year compound annual growth rate (sales per share) stands at 25.3%, while its estimated two-year CAGR for earnings per share lands at 46.7%, FactSet reports.
The company is a born moneymaker (it’s recorded profits in each of the past five years), and its new Instinct GPU data center is already generating revenues in the AI chip market. Meanwhile, the company’s Epyc CPUs have seen a big boost in sales in 2024.
AMD also fortified 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.
Of all the analysts who track AMD, 81% give it a “buy” rating with a consensus target price of $185 per share. AMD shares closed at $137.60 on Nov. 20.
Taiwan Semiconductor Manufacturing Co. Ltd. (TSM)
Taiwan Semiconductor is having a banner 2024, with its stock price up 83% year to date. The company got some good news in November: The U.S. Commerce Department has approved a $6.6 billion government subsidy tied to the CHIPS and Science Act passed in 2022. TSMC plans to use the funds to build a chip manufacturing site in Arizona. TSMC has indicated that it plans to build 10 new chip factories domestically and overseas by 2025, and it is nearing completion of its latest project in Kumamoto, Japan.
Analysts are largely backing the stock. Barclays boosted its price outlook from $215 to $240 per share, citing the company’s bullish growth outlook. TSM shares traded at $188.40 as of the Nov. 20 market close.
Synopsys Inc. (SNPS)
Sunnyvale, California-based Synopsys specializes in electric design automation, which makes semiconductor chip design faster and more efficient. The company doesn’t report Q3 earnings until early December, but analysts expect SNPS’ earnings per share to clock in at $3.29, a 3.8% rise from the same period in 2023.
Loop Capital likes what it sees from SNPS, recently issuing a buy recommendation and a target price of $675 per share, well above its latest closing price of $541.41. Piper Sandler analyst Clarke Jeffries is largely in agreement, assigning an “overweight” rating and a target price of $670 per share.
Overall, 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 and 5G mobile networks.
[Best Tech Stocks to Buy for 2024]
Arm Holdings PLC (ARM)
ARM shares are up 78% in 2024, buoyed by strong data center and AI demand. Although ARM doesn’t manufacture semiconductor chips, its core business is licensing CPUs to big corporate brands like Apple Inc. (AAPL) and Microsoft Corp. (MSFT).
While the company’s processors are widely used in the smartphone market, ARM is gaining momentum in the data center and personal computing markets.
The company has particularly 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, with a $280 million stake representing 65% of NVDA’s stock portfolio. The chip technology developer also counts Amazon.com Inc. (AMZN) and Qualcomm Inc. (QCOM) as customers.
Apple, in particular, is boosting Arm Holdings’ fortunes. The computing giant is using ARM processors for its new line of AI smartphones.
Intel Corp. (INTC)
Like Taiwan Semi, Intel is a big recipient of Commerce Department grants. The company is in place to land $8.5 billion in funding from the CHIPS and Science Act. Intel has four new manufacturing plant projects lined up in Arizona, Oregon, Ohio and New Mexico.
On the stock front, Santa Clara, California-based Intel is still reeling from being replaced by Nvidia in the Dow Jones Industrial Average. Even though the move is widely viewed as symbolic, Intel shares are down significantly in 2024, leading the company to cut operating costs, lay off 15,000 workers and temporarily suspend dividend payments. Overall, Intel shares are down 52% for the year, although the stock is mounting a comeback, gaining 14.4% in the past three months.
Analysts cite two new Intel CPU chips, Granite Rapids and Sierra Forest, and another new chip in the pipeline (Clearwater Forest) as big reasons to expect the company’s share price to rebound in 2025.
Qualcomm Inc. (QCOM)
San Diego-based Qualcomm is losing ground in late 2024, with its stock down 9.9% in the past three months. This leaves the stock with only an 8.4% year-to-date gain, well below the S&P 500’s 24% gain over the same period. Shareholders may be placated by the company’s solid 2.2% forward dividend yield.
The company expects a revival of sorts as it shifts from a smartphone-heavy chip processor to a broader chip development company that leads in diverse semiconductor markets. For instance, the company expects to earn $4 billion in revenues from the personal computing market by 2029. QCOM expects significantly higher revenues in other sectors, such as the Internet of Things, AI, and automobile and transport.
Rosenblatt Securities analyst Kevin Cassidy has high hopes for Qualcomm, recently maintaining a price target of $250 for the stock. QCOM closed at a $154.24 share price on Nov. 20.
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7 Best Semiconductor Stocks to Buy for 2025 originally appeared on usnews.com
Update 11/21/24: This story was previously published at an earlier date and has been updated with new information.
