Thanks to digital transformation accelerating globally, semiconductors have become indispensable in the tech supply chain. The space has grown exponentially due to surging chip demand across sectors like AI, consumer tech, telecom, automotive, and data centers.
Of course, this type of growth can attract a lot of attention from investors. However, one must comb through the semiconductor stocks to find the best ones. The good news is that we have three top contenders right here for your consideration.
NVIDIA Corp. (NVDA)
NVIDIA Corp. (NASDAQ:NVDA) designs advanced semiconductor chips and system architectures that power-intensive computing applications.
These include 3D gaming worlds to AI data centers. Its core technologies include NVIDIA GPUs, networking platforms, automation software, and more. The company utilizes parallel processing capabilities to accelerate workloads in areas like visualization, AI, and autonomous machines, all massively in demand.
Recently, NVIDIA collaborated with ServiceNow and Hugging Face to launch StarCoder2, a new suite of enterprise-focused large language models for code generation. The launch aims to advance the use of AI assistive technologies in software development.
Also, the company closed the books on a monumental 2024 fiscal year. The tech giant reported robust year-over-year (YOY) growth across the board. Its revenue increased by a staggering 265% to $22.10 billion, and net income surged 769% to $12.29 billion. Furthermore, operating income hit $13.62 billion, up 983% from last year. Gross margins also expanded substantially to 76%, up 12.7 pts.
Given the strong performance and fundamentals, it’s no surprise analysts have awarded a strong buy rating on the stock with a $1,200 high price projection. This makes it one of the more attractive semiconductor stocks in the market.
Advanced Micro Devices (AMD)
Advanced Micro Devices (NASDAQ:AMD) refuses to back down against the giants that dominate the industry. This company designs and produces central and graphics processing units (CPUs and GPUs) for desktop and laptop computers, data centers, gaming consoles, and more.
The key to AMD’s success is its focus on pushing processing power and speed while keeping costs relatively low. Though Intel has dominated market share in the past, AMD continues gaining ground by catering to major manufacturers and offering options tailored to customer needs.
AMD ended 2023 with excellent performance across the board. The company generated topline values of $6.17 billion, a 10% increase from $5.60 billion YOY. Also, it significantly improved its bottom line, with net income rising to $667 million. That showed a significant increase from just $21 million YOY. This massive 3,076% net income growth translated to earnings per share of $0.41. And, gross margins expanded to 47%, up 4 points from 43%. And finally, operating income swung to a gain of $342 million compared to a $149 million loss last year.
Given the strong results, analysts rate the stock as a strong buy with a high target of $270, representing over 30% upside from current levels.
Qualcomm Incorporated (QCOM)
As a pioneer in mobile connectivity tech, Qualcomm Incorporated (NASDAQ:QCOM) creates and commercializes vital wireless technologies. In turn, these assist the advancement of smartphones and networks.
The company has three main business segments. One makes the chipsets and software. The next licenses portions of its intellectual property portfolio. The last segment invests in emerging technology companies in areas like 5G, AI, and automotive. Across these business areas, the company supplies modern technologies used in telecommunications networks. These inventions’ licensing and royalty revenue accounts for most of the firm’s value.
QCOM has a reputation as one of the most reliable semiconductor stocks. Recently, it revealed its latest innovation, the Snapdragon 8 Gen 3 platform. It will power the upcoming OnePlus 12 smartphone—a flagship device. This collaboration integrates Qualcomm’s latest advances, like improved AI, enhanced gaming features, and extended battery life.
In addition, the company announced exceptional Q1 2024 results, with strong year-over-year (YOY) growth across key metrics. The company’s GAAP revenue hit $9.93 billion, up 5% from $9.46 billion YOY. Net profit soared 24% to $2.77 billion compared to $2.23 billion last year. EPS also increased 24% to $2.46. Operating income rose to $2.93 billion, while EBIT jumped 25% to $2.96 billion. With these numbers, it’s no surprise analysts firmly maintain a strong buy rating for the stock.
On the date of publication, Rick Orford did not have (either directly or indirectly) any 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.