What are the best chip stocks to invest in now?
Chip manufacturers and design companies, such as NVIDIA (NVDA.US), Taiwan Semiconductor (TSM.US) and Broadcom (AVGO.US) have seen impressive gains in their stocks in the past few months, mainly due to the increasing demand for their products driven by the AI revolution. Since the beginning of this year, NVIDIA stock has soared by 161%, while Taiwan Semiconductor and Broadcom stocks have risen by 80% and 52% respectively. AMD (AMD.US) and Marvell Technology (MRVL.US) stocks have also seen significant growth, with both companies' stocks up more than 20% this year.
So, after a round of increases, what are currently the most worthwhile chip stocks to invest in?
In response, SA analysts Jonathan Weber, Michael Del Monte, Uttam Dey, and Jere Wang gave their recommendations.
Jonathan Weber said, "As far as pure AI exposure is concerned, NVIDIA is king. For broader exposure, I am bullish on Taiwan Semiconductor, which benefits from growth across various chip makers, including NVIDIA, AMD, among others. However, there are some geopolitical risks associated with investing in Taiwan Semiconductor that cannot be ignored."
Jonathan Weber pointed out, "In the GPU race, NVIDIA is undoubtedly the winner. AMD is close behind, while Intel (INTC.US) clearly tries to avoid at all costs. Micron Technology (MU.US) still has great potential for growth. Broadcom plays a critical role in virtual networks and infrastructure. Qualcomm (QCOM.US) will be hampered by weak smart phone sales."
Uttam Dey believes that any chip company can continue to benefit from increasing capital expenditures or growing end-user markets. AMD, Qualcomm, and Impinj (PI.US) are all seeing growth or re-acceleration in their end markets. On the other hand, Taiwan Semiconductor, NVIDIA, and Broadcom will continue to benefit from growing data center capital expenditures, which are expected to grow at a compound annual growth rate of 38% to $1 trillion by 2027.
In addition, Jere Wang said, "I believe that the hype around AI is sustainable. NVIDIA is the king of AI, so it makes sense to have exposure to its core business; AMD should also expand its market share. Networking companies such as Broadcom and Marvell Technology are also key players; and don't forget about the contract manufacturing leader, Taiwan Semiconductor."