The semiconductor industry has continued to make waves, and the landscape of 2023 suggests it will remain a pivotal player in 2024. The reliance on semiconductor chips is ingrained in our modern world, and for investors looking to maximize the immense potential of these companies, the semiconductor stock market presents a compelling opportunity.
The industry is forecasted to undergo steady expansion, with companies poised to demonstrate robust financial performance as the economy rebounds. Despite its recent surges, the semiconductor industry is still in its formative stages and holds boundless years of growth. For investors who missed out on capitalizing on the unprecedented 200% surge of Nvidia (NASDAQ:NVDA) stock, the hottest semiconductor stocks present a promising avenue for long-term potential. Let’s explore three contenders that are poised to reshape 2024.
Rising Competition with Advanced Micro Devices (AMD)
Advanced Micro Devices (NASDAQ:AMD) stands as Nvidia’s formidable counterpart, making significant strides in the industry. While 2023 wasn’t a standout year for the company, a resurgence is anticipated in the current year. Projected resurgence in PC sales is expected to bolster AMD’s revenue, given the company’s pivotal role in supplying chips to the PC market. Moreover, third-quarter revenues saw an 8% increase quarter over quarter, complemented by a 21% rise in EPS, emblematic of the company’s traction and business enhancement.
Key industry players including Meta Platforms (NASDAQ:META) and Microsoft (NASDAQ:MSFT) have disclosed plans to adopt AMD’s chips, marking a notable shift away from Nvidia’s offerings. Consequently, companies seeking instant access to chips, in contrast to the protracted waiting periods for Nvidia’s chips, are embracing AMD’s latest AI chips.
AMD’s stock has surged over 100% year-to-date, yielding over 600% returns in the past five years, attesting to the resilience of its business under varied market conditions. With a current trading price of $135, the stock appears undervalued. Stifel Financial (NYSE:SF) has upgraded the stock’s price target from $145 to $170, reflecting a 20% upside from present levels.
AMD embodies the hallmarks of a sound long-term investment – a storied history, astute leadership, and robust survival acumen. As PC demand gains traction, AMD is primed to unveil stellar financial outcomes, making it an enduring victor for those with the patience to hold steadfastly.
Intel (INTC): Navigating New Frontiers
Commencing a transformative trajectory, Intel (NASDAQ:INTC) stands to gain from the CHIPS Act. Though its recent financials have failed to impress, 2024 portends a different narrative. The imminent launch of Gaudi 3, an AI accelerator poised to outperform Nvidia’s chips in data centers, augurs well for Intel’s prospects.
Moreover, the company’s collaboration with DigitalBridge Group in unveiling Articul8 AI, an autonomous AI enterprise, is poised to furnish secure and cost-effective AI solutions to enterprises. While financial details are undisclosed, this strategic move bodes well for expanding Intel’s market footprint.
While Intel has arrived late to the AI race, the efficacy of its chips is pivotal. The company, bolstered by its business acumen, is poised to prove its mettle in the fierce AI industry. Furthermore, its expansion of manufacturing facilities in Ireland and Oregon signifies an ongoing commitment to new horizons.
INTC stock has surged by 69% year-to-date but exhibited relative stasis over the past five years. Nevertheless, the company appears capable of sustaining its current momentum, offering a measured, albeit steadfast, climb from its current trading price of $47. Stifel Financial’s analyst has raised the stock’s price target from $38 to $45, maintaining a hold rating while identifying the semiconductor stock as an attractive prospect for 2024.
Unwavering Dominance: Taiwan Semiconductor Manufacturing (TSM)
Pioneering the semiconductor domain, Taiwan Semiconductor Manufacturing (NYSE:TSMC) reigns as a premier semiconductor stock poised to captivate the market. Supplying chips to major tech titans such as Nvidia, the company commands over 50% of the semiconductor market. Its strategic expansion, including the construction of a plant in Arizona incentivized by the CHIPS Act, although dampening earnings, presents substantial upside potential.
As the paramount semiconductor foundry, TSMC wields unparalleled expertise and leadership, poised to perpetuate its market ascendancy. A paramount merit of investing in the stock lies in the company’s niche – exclusively catering to auxiliary companies’ chip requirements. This positioning ensures a consistent revenue stream throughout the year. As demand for PCs and smartphones gains momentum, the company is primed to witness a pronounced uptick in chip requisition.
With a 31% surge in its stock valuation year-to-date and a current trading price of $100, TSMC epitomizes a stock worthy of long-term investment and retention.