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Posted on Oct 9

Top Semiconductor Stocks to Watch: Market Trends & Investment Insights

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Nasdaq Semiconductor Related Updates - October 2024

Several semiconductor stocks have stood out for their impressive performance in recent times:

NVIDIA (NVDA), Taiwan Semiconductor Manufacturing (TSM), and Broadcom Inc (AVGO) are among the top performers, outpacing the S&P 500 index significantly. NVIDIA, in particular, has seen a 168.97% return over the past year, driven by its strong position in the AI industry.
Other notable performers include Coherent Corp (COHR) with a 172.06% return, Monolithic Power System Inc (MPWR) with a 93.03% return, and Advanced Micro Devices Inc (AMD) with a 55.37% return.

The semiconductor sector is driven by increasing demand for chips in various devices, especially with the AI revolution. Companies like NVIDIA are benefiting from high demand for GPUs used in AI applications.
Despite recent pullbacks, the long-term outlook remains positive, with technology executives bullish on continued AI investment and growth.

The third quarter saw a pullback in chip stocks due to recession fears and soft jobs reports, but recent economic data, including jobs growth and decreasing inflation, suggest a potential revival in consumer and corporate spending.
China's recent economic stimulus is also expected to boost the semiconductor market, given China's significant consumption of global chip production.

Micron Technology (MU) reported strong Q4 earnings, defying skeptics and indicating high demand for its high-bandwidth memory (HBM) products for AI applications. This suggests a potential strong recovery in the chip market for 2025.

Investors can choose between buying individual semiconductor stocks or investing through semiconductor ETFs. Individual stocks can offer market-beating returns but come with higher risks and potentially higher costs. ETFs, such as the VanEck Semiconductor ETF (SMH), provide diversified exposure to the sector with lower costs.

Morgan Stanley recommends Taiwan Semiconductor as a top pick, anticipating a 15-20% revenue compound annual growth rate over the next five years, supported by robust capacity expansion.

ON Semiconductor Corp. (ON), while experiencing a recent decline, is still considered a significant player in the semiconductor industry. However, its current performance is affected by broader market conditions.

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