If you’re interested in joining the millionaire’s club, investing in semiconductor stocks presents a sensible approach. Fundamentally, these chipmakers represent the lifeblood of digital innovation. Whether we’re talking about connectivity, video games, or artificial intelligence, the tech ecosystem runs on advanced computer chips.
To put it into numbers, McKinsey & Company noted that sales of the global semiconductor market boomed by 20% to reach $600 billion in 2021. Further, analysts at the research firm estimated that the industry’s aggregate annual growth could average from 6% to 8% a year to 2030. At the culmination of this forecast period, the sector could hit $1 trillion. Thus, it’s well worth considering high-return semiconductor stocks.
As well, future innovations from AI to autonomous driving protocols to renewable energy infrastructure will utilize the most advanced chips. By logical deduction, investors should target top semiconductor stocks now to build wealth in a burgeoning industry. If you’re ready to ramp up your portfolio, these are the millionaire-maker semiconductor stocks to buy.
Ichor (ICHR)
Ranking among the lesser-known chip specialists, Ichor (NASDAQ:ICHR) still makes a case for millionaire-maker semiconductor stocks. According to its corporate profile, Ichor is a leader in the design, engineering, and manufacturing of critical fluid delivery subsystems and components for semiconductor capital equipment. Its product offerings include gas and chemical delivery subsystems, which represent key elements of the process tools used in the manufacturing of semiconductor devices.
Now, ICHR probably won’t be an immediately rewarding name among high-return semiconductor stocks, though it did move up 25% since the January opener. However, because it plays a valuable stagehand role – that is, Ichor keeps the behind-the-scenes machinery moving – ICHR ranks among the most valuable long-term investments in the chip-building space.
On a financial note, Ichor features solid top-line expansion (a three-year revenue growth rate on a per-share basis of 17.5%) and consistent profitability. Also, ICHR trades at a trailing revenue multiple of 14.94, ranking favorably below 66% of its peers. Thus, it’s one of the top semiconductor stocks to buy.
Diodes (DIOD)
Based in Plano, Texas, Diodes (NASDAQ:DIOD) delivers high-quality semiconductor products to the world’s leading companies in the consumer electronics, computing, communications, industrial and automotive markets. The company leverages its expanded product portfolio of discrete, analog, and mixed-signal products and leading-edge packaging technology to meet customers’ needs. Since the start of the year, DIOD gained nearly 19% of its equity value.
A worthwhile consideration for millionaire-maker semiconductor stocks to buy, Diodes runs a three-year revenue growth rate of 21.7%, beating out 73% of its peers. Also, its free cash flow growth rate during the same period comes in at 15.8%, above 63%. Moreover, the company enjoys trailing-year operating and net margins of 20.04% and 16.61%, respectively, ranking better than at least 75% of sector rivals.
Also, it’s worth pointing out that Diodes commands significant strengths in its balance sheet. For example, its equity-to-asset ratio clocks in at 0.7 times, above the sector median of 0.63. Also, its Altman Z-Score of 6.7 reflects high fiscal stability.
STMicroelectronics (STM)
One of the more intriguing ideas for millionaire maker semiconductor stocks for patient investors, STMicroelectronics (NYSE:STM) designs, develops, manufactures, and markets various advanced products. These include discrete and standard commodity components and application-specific integrated circuits. It also has full custom devices and semi-custom devices for analog, digital, and mixed-signal applications. Since the January opener, STM gained nearly 40% of its equity value. Over the trailing one-year period, STM shot up almost 59%.
As a vital cog in the chip-making value chain, STM offers a strong upside thesis for those investing in semiconductor stocks. With a long pathway of relevance, Wall Street analysts have pegged STM as a unanimous strong buy. Their average price target lands at $58, implying over 17% upside potential. Not only that, the high side target of $62 implies almost 26% growth.
Aiding STM’s cause is that even with the company posting better-than-sector-average revenue and EBITDA growth and driving home consistent profitability, it remains undervalued. Right now, STM features forward earnings multiple of 11.21, ranked lower than 88% of its peers.
Taiwan Semiconductor (TSM)
Geopolitically, the namesake nation of Taiwan Semiconductor (NYSE:TSM) generates headlines but for unpleasant reasons. I don’t need to pound home the issue but the reality is that Western rivalry with China presents friction, to put it diplomatically. Nevertheless, I still like TSM as one of the millionaire maker semiconductor stocks to buy. As the world’s most valuable chip foundry, it offers significant upside potential.
Even better, covering analysts agree, pegging TSM a unanimous strong buy. Overall, their average price target lands at $121.67, implying just over 20% growth. However, Susquehanna is presently the most optimistic about Taiwan Semi, forecasting a $128 price target. If TSM gets there, we’re talking about a return of over 26%.
In the open market, TSM continues to fly, gaining nearly 37% since the January opener. Financially, Taiwan Semi commands an excellent three-year revenue growth rate of 28.4%. Even with the optimism, TSM trades at a forward multiple of only 18.32, ranked better than 67.16% of its peers. Thus, it’s one of the top semiconductor stocks to own.
Amtech Systems (ASYS)
Based in Tempe, Arizona, Amtech Systems (NASDAQ:ASYS) is a leading global manufacturer of capital equipment, including thermal processing and wafer polishing, and related consumables used in fabricating semiconductor devices, such as silicon carbide (SiC) and silicon power chips, electronic assemblies and light-emitting diodes (LEDs). Per its corporate profile, Amtech sells these products to semiconductor and automotive component manufacturers worldwide, particularly in Asia, North America, and Europe.
Given its wide-ranging relevancies, it’s no shocker that ASYS ranks among the millionaire maker stocks to buy. While it doesn’t get much coverage, Benchmark’s Mark Miller pegs ASYS a buy with a $13 price target. Should ASYS hit that price point, speculators may see just under 40% upside.
Financially, Amtech rates as a riskier enterprise compared to other chip-related enterprises. For example, the company’s three-year revenue growth rate of 8% is rather modest. It could also use some shoring up in its balance sheet. That said, I do like its trailing-year net margin of nearly 14%. Also, the market prices ASYS at a forward multiple of 12.39, which is significantly undervalued. If you’re looking for high-return semiconductor stocks to gamble on, Amtech could be interesting.
Silicon Motion (SIMO)
A global leader in supplying NAND flash controllers for solid-state storage devices, Silicon Motion (NASDAQ:SIMO) deserves careful consideration for millionaire maker semiconductor stocks to buy. Per its public profile, Silicon Motion has the broadest portfolio of controller technologies. Plus, its controllers are widely used in storage products found in data centers, PCs, smartphones, and commercial and industrial applications.
As one of the most relevant names among semiconductor stocks, Silicon Motion attracts considerable attention on Wall Street. Right now, analysts peg SIMO as a unanimous strong buy. Their average price target stands at $95, implying over 49% upside potential. Moreover, Susquehanna offers a high side price target of $106, implying almost 67% growth.
Silicon justifies the optimism in part because of its fiscal resilience. Carrying zero debt on its books, management enjoys much flexibility during this uncertain market. Operationally, Silicon prints a three-year revenue growth rate of 29.8%, above 84.45% of its peers. Finally, SIMO trades at a trailing multiple of 16.52, well below the sector median of 23.79 times.
AXT (AXTI)
In my view, AXT (NASDAQ:AXTI) easily carries the status of riskiest idea on this list. A material science company, AXT develops and manufactures high-performance compound and single-element semiconductor substrate wafers comprising indium phosphide (InP), gallium arsenide (GaAs), and germanium (Ge). The company’s company’s substrate wafers are used when a typical silicon substrate wafer cannot meet the performance requirements of a semiconductor or optoelectronic device.
While enticing, AXTI simply hasn’t resonated with the investment community. Since the January opener, AXTI fell 35%. In the trailing one-year period, shares gave up more than 54% of equity value. Priced at just under three bucks, AXTI might also qualify as a penny stock under some folks’ definition.
Nevertheless, analysts regard AXTI essentially as one of the millionaire maker semiconductor stocks, pegging it a consensus moderate buy. Their average price target lands at $4.57, implying nearly 61% upside potential. Nine months ago, Wedbush’s Matt Bryson forecasted shares hitting $13, which would imply nearly 358% growth.
To be fair, Gurufocus warns its readers that AXT might be a value trap. Still, if you want to roll the dice, AXTI could be one of the high-return semiconductor stocks.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.