Summary: The semiconductor industry is poised for continued growth in 2024, so we’ve compiled a list of the best 5 semiconductor stocks to consider for investing this year. Also, we’ve concluded that the most convenient way to buy stocks in this industry is through a reputable online broker platform like eToro.
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Top 5 semiconductor stocks to buy this year
Investing in the stock market can be a daunting task, especially when it comes to choosing the right sector. However, the semiconductor industry has been consistently showing promising growth, making it an attractive option for investors. This is why we’ve compiled a list of the top 5 semiconductor stocks that you should consider adding to your investment portfolio this year, including:
- Taiwan Semiconductor Manufacturing (NYSE: TSM);
- Broadcom (NASDAQ: AVGO);
- ASML Holding N.V. (NASDAQ: ASML);
- Applied Materials (NASDAQ: AMAT);
- Texas Instruments (NASDAQ: TXN).
Note
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Taiwan Semiconductor Manufacturing
Taiwan Semiconductor Manufacturing (NYSE: TSM) is a global leader in semiconductor manufacturing. They provide advanced semiconductor fabrication services to a wide range of customers, including some of the biggest names in technology. Furthermore, TSMC’s cutting-edge technology and commitment to innovation have earned them a solid reputation in the industry, reflecting on its attractiveness in the eyes of worldwide investors.
Here are some reasons why TSMC stands out as a proper investment option:
- Strong customer base: TSMC counts tech giants like Apple and Nvidia as its clients, ensuring a stable stream of orders;
- Leading-edge technology: They are known for pushing the boundaries of semiconductor manufacturing, staying ahead of the competition;
- Global reach: With manufacturing facilities in Taiwan and expanding to the United States, TSMC has a global presence.
Note
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Broadcom
Another well-established semiconductor company, Broadcom (NASDAQ: AVGO) offers a wide range of products, including semiconductor chips for networking, storage, and wireless communication. They are also known for their focus on delivering reliable and high-performance solutions to their customers.
Here’s what makes Broadcom a solid choice for investing:
- Diverse product portfolio: Broadcom’s product range covers various industries, reducing dependence on a single market;
- Acquisitions: They have a history of acquiring companies to expand their capabilities and market reach;
- Dividend growth: Broadcom has a track record of consistently increasing dividends, making it attractive for income-focused investors.
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ASML Holding N.V.
ASML Holding (NASDAQ: ASML) is a Dutch company that specializes in photolithography machines, a critical component in semiconductor manufacturing. Hence, their machines are used by leading chipmakers to produce smaller, more powerful chips.
Here’s why ASML is a standout investment:
- Niche market dominance: ASML’s photolithography machines are indispensable for advanced semiconductor manufacturing;
- Technological leadership: They consistently innovate to stay ahead of their competitors;
- Strong financials: ASML’s financial stability and growth potential make it an appealing choice.
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Applied Materials
Applied Materials (NASDAQ: AMAT) is a major player in the semiconductor equipment industry. They provide manufacturing equipment, services, and software solutions to semiconductor manufacturers worldwide.
This is why Applied Materials is a solid pick to invest in:
- Industry support: Their equipment and services are essential for semiconductor manufacturing, ensuring a steady stream of business;
- Diverse product offering: Applied Materials serves various segments of the semiconductor market, reducing risk;
- Innovation: They continuously invest in research and development to stay at the forefront of technology.
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Texas Instruments
Lastly, we have Texas Instruments (NASDAQ: TXN). This is yet another well-established semiconductor company known for its analog and embedded processing chips. Their products find applications in a wide range of industries, including automotive, industrial, and consumer electronics.
Here’s what makes Texas Instruments an attractive choice for investing:
- Stability: Texas Instruments has a long history of profitability and stability;
- Dividends: They have a consistent record of paying dividends, appealing to income-oriented investors;
- Diverse customer base: Their chips serve multiple industries, reducing vulnerability to market fluctuations.
Your capital is at risk.
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Understanding semiconductor stocks
Often referred to as chips or microchips, semiconductors are tiny electronic components that are the building blocks of most modern electronic devices. They are found in smartphones, computers, cars, and even household appliances. Therefore, as our world becomes more and more digital and interconnected, the demand for these microchips continues to rise exponentially.
Furthermore, semiconductor companies design, manufacture, and sell these crucial components. As such, investing in semiconductor stocks means investing in companies that are at the forefront of technological advancements. Nevertheless, like all investments, semiconductors carry inherent risk with them, so we should focus on them as well.
Risks and challenges involved with semiconductor stocks
While semiconductor stocks offer significant growth potential, it’s essential to be aware of the risks and challenges associated with this sector:
- Cyclical nature: Semiconductor stocks typically follow a cyclical pattern, influenced by factors like global economic conditions and industry-specific trends. Hence, during downturns, demand for chips may decrease, affecting stock prices;
- Supply chain disruptions: The semiconductor industry relies on complex global supply chains. Disruptions, such as shortages of key materials or geopolitical tensions, can impact production and profitability;
- Competition: The industry is highly competitive, with companies constantly striving to innovate. Failure to stay ahead technologically can, therefore, result in market share loss;
- Regulatory and environmental factors: Environmental regulations and concerns can impact the manufacturing processes of semiconductor companies. Therefore, compliance with these regulations may increase costs;
- Global economic events: Economic downturns or geopolitical conflicts can impact consumer demand for electronic devices, affecting semiconductor sales.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
FAQs about the top 5 semiconductor stocks
Are semiconductor stocks a good investment for beginners?
Semiconductor stocks can be a good choice for beginners if you’re willing to research and understand the industry. However, note that diversifying your portfolio is also crucial to manage risk.
How do I research semiconductor stocks?
Start by understanding the basics of the industry, including key players and recent developments. Also, analyze financial reports, industry news, and expert opinions.
What's the best time to invest in semiconductor stocks?
There’s no one-size-fits-all answer. Timing the market is challenging; therefore, it’s generally best to invest for the long term and not try to predict short-term price movements.
Can semiconductor stocks provide regular income?
Some semiconductor stocks, like Texas Instruments and Broadcom, offer dividends. However, not all do. So, if you’re seeking regular income, you should look for companies with a history of dividend payments.
How should I manage risks with semiconductor stocks?
Diversify your portfolio across different industries to spread risk. Also, stay informed about industry trends and be prepared for market fluctuations.
Highly Rated Stock Trading & Investing Platform
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Invest in 2,800+ stocks and other assets including 70+ cryptocurrencies and commodities.
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0% commission on buying stocks - buy in bulk or just a fraction from as little as $10. Other fees apply. For more information, visit etoro.com/trading/fees.
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Copy top-performing traders in real time, automatically.
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eToro USA is registered with FINRA for securities trading.
