Semiconductors form the backbone of many devices and appliances. Semiconductor chips power up computers, smartphones, cars, refrigerators and other products that people use every day.
The semiconductor industry has large corporations lining up for chips and services. The industry has rewarded many investors, and the VanEck Semiconductor ETF (NASDAQ:SMH) captures this trend. The ETF has gained 317% over the past five years. That growth rate comfortably exceeds the S&P 500 and Nasdaq 100.
Investors can choose from several semiconductor stocks. Many of these companies have growing revenue and attractive profit margins. Here are some of the top semiconductor stocks to get rich.
Nvidia (NVDA)
Nvidia (NASDAQ:NVDA) continues to thrive as artificial intelligence (AI) tools gain momentum. The company produces the best chips that enable AI tools to operate at a high level. Investors have seen their shares gain 238% year-to-date. The stock has soared by almost 1,400% over the past five years.
While the company appeared overvalued at the start of the year, a sudden net income surge brought the forward P/E ratio to a reasonable 24. The company has a PEG ratio under 0.50. The valuation has dropped drastically due to earning reports like the one Nvidia released in the third quarter of fiscal 2024.
During that quarter, Nvidia reported 206% year-over-year (YoY) revenue growth and 1,259% YoY net income growth. Large demand for Nvidia’s data center business has driven considerable growth. However, investors should also look at other segments like Gaming and Professional Visualization, which achieved year-over-year revenue growth rates of 81% and 108%, respectively.
Nvidia has attracted many investors due to its stellar performance and tremendous runway. The AI boom seems like it’s here to stay, which is good news for Nvidia investors.
Broadcom (AVGO)
Broadcom (NASDAQ:AVGO) hasn’t had a year as good as Nvidia, but a 100% year-to-date gain still beats most of the market. Shares have also gained 352% over the past five years.
Broadcom regularly posts high-profit margins that exceed 30% and hands out a generous dividend. The yield currently sits at 2%, but it has a good history of raising its dividend. The firm recently raised its quarterly dividend by 14% to $5.25 per share.
The company expects to grow semiconductor revenue by the mid to high single digits in 2024. However, the company can still generate impressive revenue growth through its completed acquisition of VMware. The acquisition gives Broadcom exposure to the rapidly growing cloud computing and cybersecurity industries.
Broadcom has the potential to become a trillion-dollar company by 2030. Shares would have to more than double to reach that valuation. Investors who wait long enough can see their position quintuple. While they wait, Broadcom will provide a steady dividend that continues to grow at a high rate.
Lam Research (LRCX)
Lam Research (NASDAQ:LRCX) does not produce chips, but it offers essential equipment for chipmakers. The company’s wafer fabrication technology allows corporations to develop smaller, more effective devices.
Smaller chips result in faster devices since electrical signals within each chip do not have to travel as far. Large corporations seeking better products frequently turn to Lam Research for assistance.
Investors have turned to Lam Research for higher returns and have been greatly rewarded. Shares are up by 85% year-to-date and surged 503% over the past five years. The company is dealing with some headwinds at the moment but remains an enticing long-term stock.
Shares trade at a 26 P/E ratio and come with a 1.04% dividend yield. Just like Broadcom, Lam Research also does a great job at raising its annual dividend. The corporation hiked its quarterly dividend from $1.725 to $2.00 in 2023. That comes out to a 16% year-over-year growth rate.
On this date of publication, Marc Guberti held long positions in NVDA and AVGO. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
