The semiconductor industry is set to experience significant growth in 2024, driven by increasing demand from various sectors such as artificial intelligence, data centers, and electric vehicles. As the global semiconductor spending is projected to reach $1 trillion by 2030, with the United States accounting for half of this expenditure, investors are keen to identify the best semiconductor stocks to capitalize on this opportunity.
In this article, we will delve into the top 7 semiconductor stocks for April 2024, analyzing their market share, profit margins, and future growth prospects. From industry leaders like Advanced Micro Devices and Nvidia to promising ETFs like the VanEck Semiconductor ETF, we will explore the key players in the semiconductor sector and their potential to deliver strong returns in the coming year.
1. Qualcomm (QCOM)
Qualcomm (QCOM) is a leading semiconductor company that has been delivering strong performance, driven by its robust fundamentals and attractive valuation. The company’s stock price, currently at $169.13, is projected to reach $240 by the end of 2024 and $500 by 2030, making it a promising long-term investment opportunity. Qualcomm’s unique AI upside sets it apart from other high-priced chip names, as it operates in three primary business segments:
- Chipsets and software
- Intellectual property licensing
- Investment in 5G and AI technologies
Despite underperforming relative to its chip peers, Qualcomm is likely to beat expectations from a profitability perspective. The company’s upcoming Snapdragon 8 Gen 4 chipset may be a trailblazer in AI-focused memory technology, showcasing its dedication to generative AI and AI-related hardware opportunities. Analysts predict that Qualcomm’s stock price could reach $266.90 after one year and $857.93 after five years, making it a compelling buy at current levels for long-term investors.
Qualcomm’s financial health is expected to remain strong, with retained earnings likely to grow to about $25 billion and net income applicable to common shares reaching approximately $15.6 billion by March 28, 2024. The company’s focus on connectivity chip know-how has allowed it to expand into new areas such as the Internet of Things and automotive technology, positioning it well for future growth in the semiconductor industry alongside other top picks like Nvidia (NVDA).
2. Nvidia (NVDA)
Nvidia (NVDA) has emerged as a dominant force in the semiconductor industry, particularly in the realm of artificial intelligence (AI) and high-performance computing. The company’s share price has skyrocketed, returning an impressive 73% in 2023 and adding roughly $925 billion to its market capitalization. Nvidia’s position as the industry’s leading GPU designer has allowed it to capitalize on the surge in demand for AI, machine learning, cloud computing, and autonomous vehicles.
Nvidia’s financial health remains robust, with remarkable earnings growth and a strong balance sheet. The company’s stock price has tripled in value since 2023, reaching $902.50 as of April 2024. Analysts have been bullish on Nvidia’s prospects, with many increasing their price targets:
- UBS: $1,100
- Truist: $1,177
- HSBC: $1,050
- Bank of America: $1,100
Nvidia’s recent GTC conference for AI developers showcased its commitment to innovation, with the announcement of the new Blackwell AI chip, expected to accelerate computing. The company’s strategic partnerships, such as its collaboration with ServiceNow to release an open-access platform for coders, further solidify its position as a key player in the AI market.
3. Ishares Semiconductor ETF (SOXX)
The iShares Semiconductor ETF (SOXX) is a popular choice for investors seeking exposure to the semiconductor industry. As of March 27, 2024, the fund’s net assets stand at an impressive $12,537,142,712, with a closing price of $225.68. The ETF aims to track the NYSE Semiconductor Index, providing investors with a diversified portfolio of U.S. companies involved in the design, manufacture, and distribution of semiconductors.
Key features of the iShares Semiconductor ETF (SOXX) include:
- Inception date: July 10, 2001
- Management fee: 0.35%
- Distribution frequency: Quarterly
- 30-day median bid/ask spread (as of March 27, 2024): 0.02%
- 30-day SEC yield (as of February 29, 2024): 0.66%
- 12-month trailing yield (as of February 29, 2024): 0.69%
- Equity beta (3y) (as of February 29, 2024): 1.53
- Standard deviation (3y) (as of February 29, 2024): 33.18%
- P/E ratio (as of March 27, 2024): 32.94
- P/B ratio (as of March 27, 2024): 5.49
The iShares Semiconductor ETF (SOXX) has demonstrated strong performance, with a year-to-date return of 21.9% as of March 22, 2024. This growth can be attributed to the increasing demand for semiconductors across various sectors, including artificial intelligence, data centers, electric vehicles, and high-performance computing. As technological advancements continue to drive the global economy, the semiconductor industry is poised for significant growth in the coming years, making SOXX an attractive option for investors looking to capitalize on this trend.
4. Vaneck Vectors Semiconductor ETF (SMH)
The VanEck Semiconductor ETF (SMH) is another compelling investment option for those seeking exposure to the semiconductor industry. As the sector is poised for significant growth in 2024, driven by increasing demand from artificial intelligence, data centers, and electric vehicles, SMH offers a diversified portfolio of key players in the semiconductor market.
SMH follows a market-cap-weighted index of 25 US-listed semiconductor companies, focusing on the largest and most liquid semiconductor stocks. The ETF’s key holdings include:
- Nvidia (NVDA)
- Taiwan Semiconductor Manufacturing Co. (TSM)
- ASML Holding N.V. (ASML)
- Qualcomm (QCOM)
- Intel (INTC)
- Lam Research (LRCX)
- Texas Instruments (TXN)
The market-cap-weighted approach provides a buffer against volatility, making SMH a potentially more stable investment compared to other semiconductor ETFs. As of April 2024, SMH is trading at $224.99 on the NASDAQ stock exchange, with a 1-year change of 79.98% and a 52-week range of $118.57 to $239.14. The ETF boasts a market capitalization of $18.67 billion and total assets of $466.32 million, with 82,991,874 shares outstanding and a dividend yield of 0.46%.
SMH’s investment thesis is based on the semiconductor industry’s expected growth and the solid historical performance of semiconductor ETFs. With significant holdings in key semiconductor companies like Nvidia, which is at the forefront of AI chips and high-performance computing, SMH is well-positioned to benefit from the industry’s technological advancements and increasing demand. As such, SMH presents a prudent investment opportunity for those seeking exposure to the semiconductor sector, offering both growth potential and relative stability compared to other leveraged ETFs.
5. Taiwan Semiconductor Manufacturing Company Limited (TSM)
Taiwan Semiconductor Manufacturing Company Limited (TSM) is a key player in the semiconductor industry, continuously advancing the frontiers of process technology. As the world’s leading independent semiconductor foundry, TSM manufactures various integrated circuits (ICs) for customers globally, boasting an impressive 57% gross profit margin and a 41% net income margin.
TSM is well-positioned to capitalize on the growing demand for advanced semiconductor chips, fueled by advancements in 5G, artificial intelligence, the Internet of Things, and electric vehicles (EVs). The company’s strong earnings growth and robust balance sheet make it an attractive investment opportunity in the semiconductor sector.
As of March 27, 2024, TSM stock price is $136.69, with analysts predicting significant growth in the coming years:
- TSM price is expected to reach $200 by the end of 2024 and $250 by the end of 2025
- The stock is projected to rise to $300 within the year of 2027, $350 in 2028, $400 in 2029, $450 in 2032, and $500 in 2034
- In 2024, TSM price is expected to reach $219, representing a +111% year-to-year change
Short-term forecast for the coming week (March 29 – April 5, 2024):
| Date | Price Forecast |
|---|---|
| Friday, Mar 29 | $137 |
| Monday, Apr 1 | $139 |
| Tuesday, Apr 2 | $140 |
| Wednesday, Apr 3 | $140 |
| Thursday, Apr 4 | $141 |
| Friday, Apr 5 | $141 |
With its advanced chips used in nearly all AI applications and advanced GPUs, TSM holds a strong market position with more than 50% share in semiconductor foundry services. The company is forecasting over 20% revenue growth in FY24, driven by increased demand for high-end AI GPUs. While geopolitical risk remains a potential downside factor, TSM’s strong fundamentals and strategic positioning in the AI chip market make it a compelling investment opportunity in the semiconductor industry.
6. Asml Holding n.v. (ASML)
ASML Holding N.V. (ASML) is a leading semiconductor equipment manufacturer that has demonstrated strong financial performance, with a 28% net income margin and a 38% return on total capital. The company’s stock price is expected to experience significant growth in the coming years, with forecasts predicting:
- Mid-2024: $1,371
- End of 2024: $1,764
- Mid-2025: $2,074
- End of 2025: $2,168
- End of 2026: $2,527
- End of 2031: $3,787
In the short term, ASML’s stock price is expected to fluctuate throughout April 2024, with daily predictions as follows:
| Date | Open | High | Low | Close |
|---|---|---|---|---|
| April 1 | $977 | $1,047 | $891 | $969 |
| April 2 | $969 | $1,045 | $891 | $968 |
| April 3 | $968 | $1,034 | $880 | $957 |
| April 4 | $957 | $1,055 | $899 | $977 |
| April 5 | $977 | $1,077 | $917 | $997 |
| April 8 | $997 | $1,089 | $927 | $1,008 |
| April 9 | $1,008 | $1,090 | $928 | $1,009 |
| April 10 | $1,009 | $1,067 | $909 | $988 |
| April 11 | $988 | $1,057 | $901 | $979 |
| April 12 | $979 | $1,041 | $887 | $964 |
| April 15 | $964 | $1,065 | $907 | $986 |
| April 16 | $986 | $1,031 | $879 | $955 |
| April 17 | $955 | $980 | $834 | $907 |
| April 18 | $907 | $1,022 | $870 | $946 |
| April 19 | $946 | $1,028 | $876 | $952 |
| April 22 | $952 | $1,028 | $876 | $952 |
| April 23 | $952 | $1,036 | $882 | $959 |
| April 24 | $959 | $1,079 | $919 | $999 |
| April 25 | $999 | $1,093 | $931 | $1,012 |
| April 26 | $1,012 | $1,091 | $929 | $1,010 |
| April 29 | $1,010 | $1,083 | $923 | $1,003 |
| April 30 | $1,003 | $1,099 | $937 | $1,018 |
Despite the fluctuations, ASML’s strong financial health and position in the semiconductor industry make it an attractive investment opportunity. The company has a very small chance of experiencing financial distress in the near future, further solidifying its status as a key player in the semiconductor sector.
7. Advanced Micro Devices, Inc. (AMD)
Advanced Micro Devices, Inc. (AMD) is a prominent player in the semiconductor industry, focusing on the design and manufacture of high-performance computing and graphics processors. AMD’s stock price is expected to experience some fluctuations in April 2024, with a predicted price of $176 at the end of the month, representing a 2.8% decrease from the beginning of the month.
Despite the short-term volatility, AMD’s long-term prospects remain promising. The company’s strong position in the AI chip market and its strategic partnerships with industry leaders like Microsoft and Google have positioned it well for future growth. AMD’s financial health is robust, with consistent revenue growth and expanding profit margins, driven by the increasing demand for its products in data centers, personal computers, and gaming consoles.
Looking ahead, AMD is poised to benefit from the growing demand for AI chips and high-performance computing solutions. The company’s technological advancements, such as its Zen architecture and RDNA graphics technology, have enabled it to gain market share from competitors like Intel and Nvidia. As the global economy continues to recover and the semiconductor industry experiences significant growth, AMD is expected to be a key player in the coming years, with analysts predicting strong revenue growth and expanding market share in the AI chip market.
The Top 7 Best AI Stocks to Watch in April 2024
Conclusion
The demand for semiconductors from a variety of industries, including artificial intelligence, data centers, and electric vehicles, will likely increase significantly in the upcoming years. The top semiconductor stocks discussed in this article, including Qualcomm, Nvidia, ASML Holding, and Advanced Micro Devices, are well-positioned to capitalize on this growth, thanks to their strong market positions, technological advancements, and strategic partnerships.
As investors seek to benefit from the semiconductor industry’s expansion, it is crucial to consider factors such as market share, profit margins, and future growth prospects when making investment decisions. By staying informed about the latest trends and developments in the semiconductor sector, investors can make well-informed choices and potentially reap the rewards of this exciting and rapidly evolving industry.
Click Here to File Your Taxes with Turbo Tax
FAQs
What are the top semiconductor stocks to consider for investment in April 2024?
The standout semiconductor stocks as of March 2024 include Broadcom (AVGO) with a notable dividend yield, Taiwan Semiconductor (TSM) also offering a dividend yield, Qualcomm (QCOM) which provides a dividend yield, Lam Research (LRCX) with its dividend yield, Analog Devices, Inc. (ADI), Microchip Technology (MCHP) featuring a dividend yield, United Microelectronics (UMC) with a dividend yield, and ASE Tech Holding Co.
Is it advisable to invest in semiconductor stocks in 2024?
Investment in semiconductor stocks has yielded solid returns in the first quarter of 2024. Despite some industry experts suggesting that the growth rate in the semiconductor sector may slow down, investors have not expressed dissatisfaction with their portfolio performance, as semiconductor stocks have continued to provide robust returns in the early part of 2024.
What are the most promising stocks to invest in during 2024?
The question regarding the most promising stocks to invest in during 2024 is not specifically answered here. However, the semiconductor stocks listed above are among the top performers and may be considered promising investments based on their performance in early 2024.
Which individual semiconductor stock is the best performer?
The best individual semiconductor stock is not singled out in the provided information. The stocks mentioned are all considered top performers in the semiconductor industry as of March 2024, each with its own merits and dividend yields.