Semiconductor stocks are on a bull run, as demand explodes with the rapid growth of artificial intelligence applications and platforms. Investors are pouring money into semiconductor stocks at a fevered pace with the expectation that they will take us on a quantum leap forward with AI technology that includes chatbots, digital assistants and robots.
Since January, the stocks of some leading semiconductor companies have more than doubled as the hype builds. Accounting firm Deloitte has issued a report forecasting that the global semiconductor industry will grow to $1 trillion in annual revenues by 2030, doubling in less than a decade. As the entire semiconductor industry explodes, I’ll look at three semiconductor stocks to buy before they soar to new heights in 2023.
|Advanced Micro Devices
Advanced Micro Devices (AMD)
Shares of Advanced Micro Devices (NASDAQ:AMD) have been breaking out lately, having gained 23% over the last month. The stock of this leading semiconductor producer has been rising on reports that the company is getting more involved with artificial intelligence. There have been media reports in recent weeks that AMD is partnering with Microsoft (NASDAQ:MSFT) on the development of a new AI processor. There have also been articles saying that AMD is working on a new superchip that could have broad applications in AI.
Artificial intelligence hype aside, AMD stock has also benefitted from the company’s strong financial performance. The company managed to beat Wall Street expectations in its most recent quarter despite slumping personal computer sales weighing on its business. Following the company’s Q1 print, AMD stock received several analyst upgrades, with Bank of America (NYSE:BAC) raising its price target on the shares to $120 from $105.
Shares of semiconductor company Broadcom (NASDAQ:AVGO) have also been on an upswing lately, gaining 23% through nearly five months of the year. However, AVGO stock has not had the huge run that competing semi stocks such as Nvidia (NASDAQ:NVDA), which has more than doubled year to date, have enjoyed. This suggests that Broadcom’s stock could have more room to run. The stock isn’t cheap at nearly $700 a share. But it offers a quarterly dividend that yields 2.7%, which is better than most other semiconductor securities.
AVGO stock also just got a huge catalyst with news that Apple (NASDAQ:AAPL) has signed a deal with Broadcom to have the chipmaker develop 5G radio frequency components in the U.S. The exact value of the deal wasn’t revealed, though Apple said it is a multibillion dollar arrangement and part of its commitment to invest $430 billion in the American economy. Analysts were quick to praise the deal with Apple, saying it positions Broadcom, and its stock, for future growth.
Marvell Technology (MRVL)
Marvell Technology (NASDAQ:MRVL) is a semiconductor stock that is recovering after a difficult decline last year. So far in 2023, MRVL stock is up 28%. However, it’s still 15% lower than where it was at 12 months ago and is down 50% from the all-time high the stock price reached in December 2021. There is reason to be bullish on Marvell’s stock though as the company continues to focus on developing chips for the fast-growing automotive industry (electric vehicles) and the AI sector.
For its fiscal 2023 earnings, Marvell Technology managed to grow its revenue by 33% year over year to $5.9 billion. The company isn’t profitable and reported a net loss of $164 million for fiscal 2023. However, that was a major improvement from a loss of $421 million recorded a year earlier. The company’s free cash flow rose 69% to $1.07 billion. Marvell has said it sees future growth in not just automotive and AI, but also in cloud computing and 5G mobile networks that use its semiconductors.
On the date of publication, Joel Baglole held long positions in NVDA, MSFT, AAPL and BAC. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.