In the ever-evolving semiconductor sector, savvy investors are eyeing the next big breakthrough. Amidst a robust recovery from recent setbacks, the hunt for premier semiconductor stocks becomes increasingly critical. This resurgence, fueled by technological advancements and market shifts, marks a promising era for the industry.
Key to this uptick is the automotive industry’s pivot to electric vehicles and the swift rise of 5G technology, acting as primary catalysts for growth. The VanEck Semiconductor ETF (NASDAQ:SMH) exemplifies this trend, boasting a 72% year-to-date bump in value. This trajectory signals promising prospects for long-term investors, while the digital revolution across sectors amplifies demand for cutting-edge semiconductors.
Furthermore, artificial intelligence infuses the sector with new potential, with the AI market projected to soar from $118 billion in 2022 to an astounding $300 billion by 2026. Entering 2023, the semiconductor landscape presents a blend of challenges and ripe opportunities, spotlighting three standout stocks worth attention.
Qualcomm (QCOM)
Qualcomm (NASDAQ:QCOM) stands as a beacon in the telecom and communications chip sector, trading at a compelling 15.5 times forward earnings, marking a historically low price point. This valuation positions QCOM as an attractive investment, especially given its impressive 34% year-to-date surge, outperforming the S&P 500’s 24% bump in the same period. Such robust performance highlights Qualcomm’s strong market stance and investor confidence.
At the forefront of innovation, Qualcomm is pioneering AI-enabled chip technology, a move set to revolutionize mobile computing. Despite earlier challenges from sluggish phone sales and reduced 5G investment, the company’s rebound, backed by solid earnings, signifies market stabilization and resilience.
Eyeing 2024, Qualcomm’s venture into AI chips marks a pivotal moment, promising strong upside potential for its investors. A significant deal with Apple (NASDAQ:AAPL) bolsters this technological leap to supply Snapdragon 5G Modem RF Systems for upcoming smartphone launches, signaling stability and forward-looking growth prospects.
Taiwan Semiconductor (TSM)
Taiwan Semiconductor (NYSE:TSM), the world’s premier semiconductor foundry, stands apart in the tech sector. Rather than designing, it manufactures chips for giants like Apple, Qcom, Advanced Micro Devices (NASDAQ:AMD), and Nvidia (NASDAQ:NVDA). This specialization has made TSM an indispensable partner in the semiconductor industry.
For decades, Taiwan Semi has focused on refining its semiconductor manufacturing, securing a top position in the market. Known for producing some of the smallest, most sophisticated chips, it leads in node advancement, demonstrating remarkable technological expertise.
Currently, TSM’s ability to produce high-performance, miniaturized chips at minimal cost gives it an edge over competitors like GlobalFoundries (NASDAQ:GFS) and United Microelectronics Corporation (NYSE:UMC). With the escalating demand for AI, high-performance computing, and IoT, TSM forecasts robust growth. October’s revenue, fueled by new Apple iPhone releases and AI tech, underscores TSM stock’s viability. With a forward P/E ratio of 20, it is a compelling investment.
Skyworks Solutions (SWKS)
Skyworks Solutions (NASDAQ:SWKS), excelling in the semiconductor domain, has deftly established a niche servicing wireless company. Central to the wireless ecosystem, its semiconductors are vital, from cell towers to user phones. With the 5G revolution unfolding, Skyworks is poised for significant growth, its technology being crucial for band switching in 5G.
Notably, SWKS’s alliance with Apple underpins nearly 60% of its 2022 sales. Although dependency on a single client carries risks, the fast-growing 5G market, projected to expand 32% annually through 2030, offers a robust counterbalance. The company has witnessed a 24.6% year-to-date gain, alongside a five-year rise of a stellar 80%.
Skyworks further stands out, with with a 2.41% forward dividend yield, an annual payout of $2.72, and consistent dividend growth over eight years, positioning its stock as a compelling investment in the evolving semiconductor landscape. All in all, it’s one of those semiconductor stocks to consider.
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.
