Breakout semiconductor stocks are set to soar, fueled by the unstoppable AI wave.
AI has turbocharged the top semiconductor businesses, pushing them towards explosive growth in the past 12 months. According to the Semiconductor Industry Association, global semiconductor sales jumped an impressive 19.3% year-over-year (YOY) in May. The stellar May performance followed a superb 15.8% growth in April, marking the first monthly increase of the year.
Moreover, these trends align with Grand View Research projections, which expect the AI market to grow from $137 billion in 2022 to an astonishing $1.81 trillion by 2030. Hence, the future looks remarkably bright for semiconductor stocks as the AI boom continues to evolve.
That said, here are three breakout semiconductor stocks to watch, benefiting from the AI boom and poised for long-term expansion ahead. Additionally, these companies feature strong fundamentals and are positioned for significant growth alongside the fast-growing AI space.
Micron Technology (MU)
Micron Technology (NASDAQ:MU) is a stalwart in the semiconductor industry, having been in business for over 45 years. While already a standout wealth compounder in its niche, the AI boom has taken things up a notch or two for MU stock. It has emerged as one of the biggest beneficiaries of the AI spending surge, with its stock gaining over 108% in the past year.
However, unlike the AI bandwagoners, Micron’s superb fundamentals reflect its lofty stock market performance. This is evident in its third-quarter (Q3) earnings print, where non-GAAP EPS of 62 cents beat estimates by nine cents. Moreover, sales jumped to $6.81 billion, marking a robust 81.6% increase on a YOY basis to beat forecasts by $140 million.
Following the blow-out result, President and CEO Sanjay Mehrotra noted, “Robust AI demand and strong execution enabled Micron to drive 17% sequential revenue growth, exceeding our guidance range in fiscal Q3.”
Additionally, its operating cash flow also saw a tremendous jump to $2.48 billion from just $24 million in the prior-year period. Therefore, Micron remains in an excellent position to continue capitalizing on AI’s expansive growth opportunities alongside other breakout semiconductor stocks.
Marvell Technology (MRVL)
Marvell Technology (NASDAQ:MRVL) is one of the leading designers of AI chips and infrastructure utilized by the biggest names in the tech world. Like its peers, it has witnessed superb momentum in its stock price in the past year, gaining almost 20% year-to-date (YTD). Moreover, given its robust positioning in the AI revolution, Wall Street expects a 26% upside in MRVL stock, assigning a consensus ‘strong buy’ rating.
Despite a lukewarm performance in its second quarter (Q2), the firm expects a much improved showing in Q3 and beyond. It forecasts an 8% sequential revenue growth for the next quarter, with an optimistic outlook for back-end of the year. This encouraging growth is linked to a ramp-up in custom AI silicon production along with a recovery in enterprise networking and carrier infrastructure.
Furthermore, investing in MRVL stock comes with a dividend. It has paid a dividend for the past 11 consecutive years, yielding 0.32%. Hence, with the expected expansion in data center operations and a recovery in its networking business, MRVL stock remains an excellent bet in the semiconductor space.
ASML (ASML)
ASML (NASDAQ:ASML) is a semiconductor manufacturing specialist known for its extreme ultraviolet (EUV) lithography machines. These machines are critical in developing advanced computer chips and, unique to ASML, facilitate the complex patterning of silicon wafers needed for semiconductor production. Consequently, ASML has established itself as one of the most important companies in the AI revolution.
ASML stock soared 50% in the past year, outperforming the broader market. However, it has long been surfing the powerful secular trends sweeping through the semiconductor industry. To put things in perspective, ASML stock has jumped upwards of 400% in the past five years. Moreover, despite posting lofty gains in the past year, according to Wall Street analysts, ASML stock may only jump another 5%.
The future looks remarkably bright for ASML, with forward revenue and EBITDA expected to be 19.4% and 27.6%, respectively. Much of the enthusiasm is due to ASML’s EUV lithography machines and its powerful role in powering the AI industry.
On the date of publication, Muslim Farooque 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
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.