The 3 Hottest Semiconductor Stocks to Watch in 2024

Stock Market

The semiconductor industry took the world by storm in 2023, and I believe it will continue to remain a highlight of this year too. It is hard to imagine a world without semiconductor chips, and if you want to make the most of the ample potential these companies have, it is best to invest in semiconductor stocks. You should especially consider the hottest semiconductor stocks that we have listed here!

Analysts expect a steady expansion of this industry, and as the economy improves, we could see companies report stellar financials. This is still an early stage for the industry and it has many years of growth. So, if you haven’t had a chance to buy Nvidia (NASDAQ:NVDA) stock before it soared by more than 200%, you can still look for the hottest semiconductor stocks that have solid long-term potential. Let’s take a look at them.

Advanced Micro Devices (AMD)

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Advanced Micro Devices (NASDAQ:AMD) is Nvidia’s biggest competitor and it is taking giant strides in the industry. While 2023 may not have been a blockbuster year for the company, it is set to rebound this year. It is expected that PC sales will rise again, and we could see AMD report better sales revenue from the same since the company supplies chips for PCs. Additionally, the third quarter revenue was up 8% quarter over quarter, and the EPS was up 21%. This shows that the company is gaining ground and improving its business performance.

Top tech giants including Meta Platforms (NASDAQ:META) and Microsoft (NASDAQ:MSFT)  have announced the adoption of AMD’s chips and this is a strong shift from Nvidia’s chips. That said, companies not willing to wait for weeks to get their hands on Nvidia chips will be happy to use AMD’s latest AI chips.

AMD stock is up over 100% in the year and has generated more than 600% returns in the past five years. This speaks a lot about the strength of the business to survive amidst all market conditions. Trading at $135 today, the stock looks undervalued to me.

Stifel Financial (NYSE:SF) analyst has upgraded the price target for the stock from $145 to $170 and this shows a 20% upside from the current level.

AMD has everything it takes to be a long-term investment. It has a solid history, exceptional leadership, and the ability to survive any storm. As the demand for PCs improves, we could see AMD report impressive numbers. It can be a long-term winner, but you must have the patience to hold on to it.

Intel (INTC)

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A hot semiconductor stock for 2024, Intel (NASDAQ:INTC) benefits from the CHIPS Act. However, it hasn’t been able to impress investors with the financials. However, this year could be different. The company will launch Gaudi 3, an AI accelerator that is expected to beat Nvidia’s chips in data centers.

Additionally, the company launched an independent AI company, Articul8 AI, in collaboration with DigitalBridge Group. The company will offer secure and cost-effective AI solutions to enterprises. Financial details about the company aren’t disclosed yet, but this move can help Intel expand its market share.

While Intel has been late to enter the AI race, if the chips are worth the hype, we could see a strong improvement in Intel’s business. The company has been around for a while and they do know how to run a business, but the AI industry is getting highly competitive, and it is time to prove their worth. The company is also expanding its manufacturing facility in Ireland and Oregon.

INTC stock is up 69% in the year but relatively flat in the past five years. I believe the company will be able to sustain the current momentum, and we could see a slow but steady upside from the current level of $47.

Stifel Financial analyst also increased the price target from $38 to $45 and has a hold rating on the stock. The analyst finds the semiconductor stock attractive as we head into 2024.

Taiwan Semiconductor Manufacturing (TSM)

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A well-known name in the semiconductor industry, Taiwan Semiconductor (NYSE:TSMC) is one of the hottest semiconductor stocks to own. It makes chips for the biggest tech giants including Nvidia, and holds more than 50% of the market share in the semiconductor space. It benefits from the CHIPS Act and is building a plant in Arizona to make the most of it. While this has impacted the earnings, it still has an upside potential.

As the world’s leading semiconductor foundry, TSMC has the expertise and leadership to continue expanding its market share. One big reason to invest in the stock is that the company doesn’t produce chips for general sale but caters to other companies to meet their needs. This means it will have a steady revenue flow throughout the year. If the demand for PCs and smartphones improves, the company could see a significant improvement in the chip demand.

The stock is up 31% in the year and is exchanging hands for $100. I believe TSMC is a long-term stock to buy and hold.

On the date of publication, Vandita Jadeja did not hold (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.

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