The 5 Best Semiconductor Stocks to Watch Right Now

Why These 5 Semiconductor Stocks Are Being Watched like A Hawk

The semiconductor industry powers everything from smartphones to electric vehicles, and demand has skyrocketed recently.

As industries rely more on digital infrastructure, demand for faster, more efficient chips has exploded.

The global push toward digital transformation and automation has further amplified this demand, creating a critical supply and demand imbalance that impacts nearly every sector.

But with such rapid growth comes heightened competition and volatility, making it essential for investors to understand the underlying trends, risks, and potential of each stock.

Here are the top semiconductor stocks to watch, with data driven insights, expert advice, and key tips.

1. NVIDIA (NVDA)

Market Cap: Approximately $1.08 trillion
Price (October 2024): ~$470 per share
Why It’s a Top Pick: Leading in AI and GPUs, continuous innovation

NVIDIA has firmly established itself as a leader in the semiconductor industry, particularly in graphics processing units (GPUs) and artificial intelligence (AI).

NVIDIA’s GPUs are essential for AI, powering everything from data centers to autonomous vehicles. The company is estimated to control approximately 80% of the AI chip market, giving it a significant advantage as AI adoption grows globally.

NVIDIA’s A100 and H100 chips are key components in this space, used by tech giants like Google and Amazon for heavy duty AI processing. For investors, NVIDIA’s market position makes it a strong contender for growth as AI’s impact on industries continues to accelerate.

Investment Insight: Buy on Market Dips
Due to its high valuation, NVIDIA stock experiences occasional price dips. Many analysts view these pullbacks as opportunities, especially for long term investors aiming to capitalize on NVIDIA’s expanding role in AI and data centers.

2. Advanced Micro Devices (AMD)

Market Cap: Around $170 billion
Price (October 2024): ~$120 per share
Why It’s a Top Pick: Competitive product lineup, challenging Intel’s dominance

AMD has been a strong competitor to Intel, particularly in CPUs and GPUs. Known for its high performance, cost effective products, AMD has carved out a sizable market share in sectors like PC gaming, data centers, and consumer electronics.

One of AMD’s most strategic moves has been its acquisition of Xilinx, a leader in programmable logic devices, which enhances AMD’s portfolio in high performance computing and 5G technology.

This acquisition allows AMD to access new markets, including telecommunications and autonomous driving, and strengthens its position against competitors.

Investment Insight: Watch Product Launches for Price Rallies
AMD tends to see stock price boosts around major product launches. With new Ryzen and EPYC chips in development, AMD is expected to challenge Intel and NVIDIA, creating potential investment opportunities around these release cycles.

3. Taiwan Semiconductor Manufacturing Company (TSMC)

Market Cap: Approximately $470 billion
Price (October 2024): ~$88 per share
Why It’s a Top Pick: Largest contract chipmaker globally, exclusive partner for Apple’s custom chips

TSMC plays an indispensable role in the semiconductor supply chain, manufacturing chips for tech giants like Apple, NVIDIA, and Qualcomm. As one of the few companies capable of mass producing 3nm chips, TSMC remains at the forefront of chip innovation and manufacturing.

Industry Insight: Managing Geopolitical Risks with Expansion
TSMC’s Taiwan based operations expose it to geopolitical risks, especially amid tensions between Taiwan and China.

To mitigate this, TSMC is investing in new manufacturing plants in the U.S. and Japan to diversify its production capabilities, ensuring stability in its supply chain.

Investment Insight: Long Term Play for Stability
TSMC may not offer rapid growth, but it’s considered a “safer” investment in this sector due to its established market and steady demand. Long term investors looking for stability in semiconductor stocks often view TSMC as a strong option.

4. Intel (INTC)

Market Cap: Approximately $150 billion
Price (October 2024): ~$35 per share
Why It’s a Top Pick: New manufacturing initiatives, focusing on U.S. production

Intel has had a challenging decade, but it remains a key player with ambitious plans to regain market share. Under CEO Pat Gelsinger, Intel has launched a bold turnaround strategy, focusing on U.S. based manufacturing and increasing R&D investment to close the gap with competitors.

Industry Insight: Benefiting from U.S. Government Support
Intel’s shift toward U.S. based production aligns with federal initiatives to boost domestic semiconductor manufacturing. Government support, through subsidies and incentives, could enhance Intel’s competitiveness and help it regain its footing in the industry.

Investment Insight: Long Term Patience Required
Intel’s transformation won’t happen overnight. For investors, it’s a recovery play, with potential for growth over the next three to five years as the company’s initiatives take effect.

5. ASML Holding (ASML)

Market Cap: Approximately $350 billion
Price (October 2024): ~$650 per share
Why It’s a Top Pick: Exclusive supplier of EUV lithography machines, critical for advanced chip production

ASML holds a unique position in the semiconductor ecosystem, as it provides the essential machinery needed to produce advanced chips. Its extreme ultraviolet (EUV) lithography machines are integral to manufacturing cutting edge semiconductors for companies like TSMC and Samsung.

Industry Insight: High Demand for EUV Machines
ASML’s EUV machines are complex and costly, limiting the company’s annual production capacity.

With demand for advanced semiconductors rising, ASML’s customers are willing to pay premium prices, and orders are often booked years in advance. This demand provides ASML with a stable revenue stream and makes it a valuable long term investment.

Investment Insight: Strong Buy for Long Term Investors
Given its market dominance and limited supply of EUV machines, ASML is considered a “buy and hold” stock. Its technology will continue to be essential in the semiconductor industry, making it a solid choice for investors with a long term perspective.

How to Approach Semiconductor Stocks as an Investor

1.) Monitor Supply Chain Trends
Supply chain stability is paramount in the semiconductor industry. Key events like natural disasters or political upheaval can disrupt production and impact stock prices, particularly for companies based in Taiwan and other semiconductor hubs.

For instance, Taiwan’s role as a global chip manufacturing leader makes geopolitical tensions between Taiwan and China a critical factor.

If you're following companies like TSMC and ASML, keep an eye on news reports from credible sources and government policy updates about the semiconductor supply chain. You may even set up Google Alerts for specific companies and regions to receive real time updates that can guide timely decisions.

Consider companies actively expanding production facilities beyond Asia, like TSMC’s plans in the U.S. and Japan, as they may have more resilient supply chains and fewer risks tied to a single region.

2.) Track Product Cycles for Strategic Entries
The launch of a next gen chip or major technological breakthrough often brings a stock price boost.

Companies like NVIDIA, AMD, and Intel typically rally when they release new products, especially if the products outperform expectations or if they cater to high growth sectors like AI or 5G.

A well timed entry ahead of these launches can lead to significant gains, especially if you're monitoring product roadmaps and upcoming conferences like CES or Computex, where new releases are often announced.

Check out technology focused news outlets like TechCrunch, Wired, or specific subreddits dedicated to tech news. They often leak product updates and give you an edge in planning investments before big announcements.

Mark release dates on your calendar and follow quarterly earnings reports, as companies may hint at new developments or product success.

3.) Diversify Within the Semiconductor Sector
Semiconductors serve multiple industries, from consumer tech and gaming to data centers, healthcare, and even military applications.

By diversifying across semiconductor companies serving various markets, you’ll reduce risk while capturing growth in multiple high demand sectors.

For example, while NVIDIA may benefit from AI adoption, TSMC is a backbone for smartphone processors, and ASML enables the manufacturing of advanced chips with its EUV lithography technology.

Pro Tip: Instead of choosing one company, consider creating a balanced portfolio within semiconductors. Pair high growth stocks like NVIDIA with long term stable players like TSMC, covering various sub segments within the industry for resilience against sector specific downturns.

4.) Take a Long Term View with Industry Leaders
The semiconductor sector’s leading companies, like TSMC and ASML, are integral to the supply chain and will remain highly relevant due to the sheer complexity and cost of entering this market.

Leaders like TSMC have a solid customer base, including Apple and Qualcomm, while ASML holds a monopoly on EUV machines, essential for cutting edge chip production. Long term investors looking for steady growth should consider these companies as a foundation, especially if they’re committed to maintaining a balanced portfolio.

Pro Tip: Review each company’s long term R&D strategy. TSMC, for instance, has committed billions to developing its 3nm and 2nm technologies, meaning they’re not just staying relevant, they’re leading.

Set periodic reminders to check in on their financial reports, as these companies often reveal their future investments and expansion plans, providing a clear outlook on their trajectory.

5.) Watch for Government Incentives and Support
The global semiconductor shortage has driven many governments, including the U.S. and the EU, to support domestic chip manufacturing.

In the U.S., the CHIPS Act aims to reduce reliance on Asia by providing billions of dollars in funding to bolster local semiconductor production.

Companies aligning with these initiatives, like Intel, which has committed to U.S. manufacturing, may benefit from subsidies and tax incentives, potentially driving up stock value and reducing risk.

Pro Tip: Keep an eye on news from the U.S. Department of Commerce and the European Commission’s updates on semiconductor investments. Companies like Intel, which align with these initiatives, are positioning themselves to receive financial backing and expand facilities. Reviewing these government actions can help you anticipate positive stock impacts or new opportunities for these firms.

The BMM Takeaway

Semiconductors are essential to modern technology, and demand will likely continue to rise.

NVIDIA, AMD, TSMC, Intel, and ASML stand out as leaders, each offering unique opportunities and risks.

Whether you’re seeking rapid growth with NVIDIA and AMD or long term stability with TSMC and ASML, the semiconductor space offers diverse investment paths.

By staying informed on market cycles, supply chain trends, and geopolitical factors, you can position yourself to benefit from this indispensable sector.

Disclaimer: The content provided in this article is for informational purposes only and should not be construed as financial advice or an endorsement of any particular investment strategy or stock pick. Investing in stocks involves risks, including the potential loss of principal. Readers are encouraged to conduct their own research and seek advice from qualified financial professionals before making any investment decisions. Past performance is not indicative of future results. The author and any related parties do not assume liability for any financial decisions made based on the information provided in this article."