Semiconductors are widely recognized as the backbone of the technology sector, with various players vying for market share in this highly competitive space. In 2023, semiconductor stocks have become pivotal investment products, particularly given the industry’s prominent role in advancing technologies such as artificial intelligence (AI), the Internet of Things, and 5G.
Consequently, these stocks present a compelling investment opportunity for investors looking to capitalize on the sector’s growth potential. Recognizing this potential, Finbold has identified the following three semiconductor equities that are likely to grow in 2024, backed by solid underlying fundamentals.
Nvidia
Nvidia (NASDAQ: NVDA) emerges as a compelling investment for 2024, fueled by its remarkable performance in the current year. With shares surging by over 240%, the semiconductor giant has solidified its position as the preferred hardware provider for AI developers worldwide.
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Beyond its AI stronghold, Nvidia’s chips find applications across diverse tech markets, spanning cloud computing, video games, and consumer products. This versatility enhances the company’s resilience and long-term potential.
Looking ahead, Nvidia is strategically positioned to potentially sustain its growth momentum in 2024. The company’s proactive approach involves expanding its manufacturing capacity and exploring partnerships with countries like Vietnam and Malaysia to boost chip production.
At the same time, the stock is backed by solid financials; for instance, as per 2023 third-quarter results, the company’s earnings soared, experiencing a substantial 206% year-over-year growth in revenue to $18.12 billion.
Elsewhere, 31 Wall Street analysts have rated Nvidia stock as a ‘strong buy,’ according to an analysis retrieved from TipRanks on December 26. The analysis, offering a forecast for NVDA over the next 12 months based on the stock’s performance in the last three months, has yielded an average price target of $661.35. The high projection stands at $1,100, while the lowest target has been set at $560.
The average target signifies a 35.44% increase from the last recorded price of $488.30. Meanwhile, as of the market close on Friday, December 22, NVDA had achieved year-to-date gains of 241%.
Intel
Intel (NASDAQ: INTC) is a potential stock buy for 2024, driven by strategic measures the company is implementing. The stock aims to extend the 2023 year-to-date gains of 80%, fueled by Intel’s transition toward a more diversified and higher-growth operating model in the face of intense competition.
Crucially, Intel is poised to benefit from its entry into the AI sector despite initial skepticism stemming from its late arrival compared to Nvidia. The upcoming Falcon Shores graphics processing unit (GPU) for AI-accelerated data centers in 2025 underscores Intel’s commitment to securing a substantial market share.
In addition to its foray into AI, Intel strategically diversifies revenue streams by investing approximately $20 billion in establishing two chip fabrication facilities in Ohio. This move reinforces Intel’s position for future growth.
Intel’s enduring dominance in legacy segments, particularly CPUs for PCs and traditional data centers remains a significant cash cow. Despite the slowing growth in these segments, they continue to generate substantial cash flow, providing Intel with resources to expand its foundry segment and invest in high-growth initiatives.
Elsewhere, by analyzing Intel stock performance for the last three months, 28 Wall Street analysts have provided 12-month price targets for the equity, resulting in an average price projection of $40.42. The high forecast is $68, while the low forecast is $17. The average price target reflects a drop of 15.79% from the last recorded price.
By press time, Intel stock was valued at $48, representing gains of almost 80% on a YTD basis.
Advanced Micro Devices
In the landscape of investment opportunities for 2024, Advanced Micro Devices (NASDAQ: AMD) stands out for compelling reasons. With a significant surge in its share price, doubling year-to-date and achieving gains of 118%, AMD is well-positioned for potential continued upward momentum.
A key catalyst for AMD’s anticipated growth is its strategic entry into the expanding AI chip industry. Despite Nvidia’s current dominance, AMD is making noteworthy progress with its MI300 chips, securing partnerships with major players such as Meta Platforms (NASDAQ: META), OpenAI, and Microsoft (NASDAQ: MSFT). The company’s commitment to outperforming AI model training and inference positions it for substantial sales growth in 2024 and beyond.
While AMD’s recent achievements in AI have garnered attention, it’s equally important to acknowledge the recovery and growth in its legacy businesses. Overcoming challenges faced in 2022, including a post-pandemic slowdown in PC sales and geopolitical issues in China, AMD has seen a notable 42% surge in sales for the client segment, reaching $1.5 billion. This growth is attributed to the popularity of AMD’s new Ryzen 7000 processors.
CEO Lisa Su’s ambitious market forecast predicts the AI accelerator market will reach $400 billion by 2027, underscoring AMD’s optimistic growth outlook.
Furthermore, according to 34 Wall Street analysts from TipRanks providing 12-month price targets for Advanced Micro Devices based on its performance in the last three months, the average price target is $132.41. The high forecast is $165, while the low forecast is $98. The average price target signifies a 5.15% drop from the last recorded value.
Notably, 26 analysts recommend a ‘strong buy’ for AMD, further emphasizing the positive sentiment surrounding the stock.
By press time, AMD was trading at $139.60, gaining 118% in 2023.
In conclusion, semiconductor stocks, exemplified by Nvidia, Intel, and AMD, present robust investment opportunities in 2024. Their stellar performances in 2023, strategic moves into emerging technologies, and positive market sentiment position them as key players in the evolving landscape of the technology sector.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
