Yes, Nvidia is one of them. But that’s not the only semiconductor game in town.
Semiconductors have long been vital to our lives, powering not only our computers, but these days, cars, smartphones, and even smart refrigerators and washing machines. Thus, it is not surprising that many semiconductor stocks have been phenomenal performers, making their shareholders richer.
With the recent proliferation of artificial intelligence (AI) applications, semiconductors have become even more vital. Here’s a look at seven semiconductor companies that appear to have bright futures—along with another way to invest in semiconductors—through exchange-traded funds (ETFs). Note that they have different focuses and different ratings as well.
Image source: Getty Images.
1. Nvidia
Nvidia (NVDA -0.85%) has grown by leaps and bounds in recent years, with many expecting it to continue to do so. (Others see it as a need to breathe.) The company made its name with gaming chips, but now it’s not only a leader in graphics processing units (GPUs) for gaming, but also in chips for data centers . And data centers are booming, as so much of our AI activity goes through them.
The stock’s valuation is steep, but if it continues to rise like crazy, it could be warranted. Proceed with caution unless you are dangerous.
2. Semiconductor Taiwan
Semiconductor Taiwan (TSM -1.10%) is the world’s largest contract chipmaker, building chips designed by others. Recently valued close to $1 trillion, its growth prospects are good, as it is a leader in its field, able to enjoy economies of scale. On the other hand, since it is based in Taiwan, it is vulnerable to China — and the US and others are working to develop more competition for the company.
3. Intel
Intel (INTC 0.48%) is one of the most popular chip makers, recently having a market capitalization of $145 billion. The stock looks reasonably valued recently, after a significant decline due to stiff competition, heavy investment in future growth and loss of market share. The company aims to grow into laptop chips — and is including an integrated AI processor in them.
4. Broadcom
Broadcom (AVGO 0.35%) has many fans because it specializes not only in chips, but also in software — and its operations are also very diverse, including wireless and wired technology, optical products, core software, cybersecurity and storage, among many others. Her clients include Apple, Microsoft, AT&T, Intel, and many other big names. Broadcom is executing a 10-for-1 stock split on July 12.
5. Qualcomm
Qualcomm (QCOM 2.44%) has been designing mobile chips for a long time — and those chips have probably been in most of the iPhones you’ve owned. Apple is looking to produce its own chips in the coming years, however, which could challenge Qualcomm. But it has been busy making chips for vehicles and smart devices, among other things, diversifying its operations. Its foray into laptop chips is another promising move.
6. Monolithic power
Monolithic power (MPWR 2.04%) it’s not as well-known as some other semiconductor companies, nor is it as large, with a recent market value close to $41 billion. But it has grown like gangbusters, taking market share from rivals with its data center chips.
Its valuation looks steep, with a recent price-to-earnings (P/E) ratio of 63, well above its five-year average of 43. So maybe wait and hope for a pullback, buy in installments over time, or just skip if you expect his amazing run to continue.
7. Micron Technology
Micron Technology (MU -1.48%) is another semiconductor titan, valued at close to $145 billion recently and specializing in memory and storage chips. Its devotees like its solid balance sheet and its typically strong performance when the cyclical memory market is booming. Detractors are wary of downsides in the memory market and see it as overvalued, with a recent price-to-earnings (P/E) ratio of 15, above its five-year average of 12.
Bonus idea: Semiconductor ETFs
These companies are all intriguing, and many, but perhaps not all, will be outstanding performers in the years and decades to come. (Much will also depend on the price at which you invest in them, if you do, so aim to buy when they look undervalued or at least reasonably valued.)
One way to play it a bit safe—while also aiming for big returns—is to invest in semiconductors through ETFs that focus on them. Check out these that have solid data:
- iShares Semiconductor ETF (NASDAQ: SOXX)
- VanEck Semiconductor ETF (NASDAQ: SMH)
- SPDR S&P Semiconductor ETF (NYSE: XSD)
- Invesco Semiconductors ETF (NYSEMKT: PSI )
Consider holding some of your assets in semiconductors — either through individual stocks or ETFs. Or both!
Selena Maranjian has positions in AT&T, Apple, Micron Technology, Microsoft, Nvidia, Qualcomm, SPDR Series Trust-SPDR S&P Semiconductor ETF and iShares Trust-iShares Semiconductor ETF. The Motley Fool has positions in and recommends Apple, Microsoft, Nvidia, Qualcomm, Taiwan Semiconductor Manufacturing and the iShares Trust-iShares Semiconductor ETF. The Motley Fool recommends Broadcom and Intel and recommends the following options: long January 2025 $45 calls on Intel, long January 2026 $395 calls on Microsoft, short August 2024 $35 calls on Intel and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.