AI Optimism Fueling Semiconductor Sales: 4 Stocks With Growth Potential

The semiconductor industry witnessed a slowdown early last year but has staged a solid comeback over the past few quarters, powered by the ongoing enthusiasm surrounding artificial intelligence (AI), especially generative AI. The ongoing trend suggests that the industry is poised to grow further on demand backed by robust advancements in AI technology, data processing and a resurgence in electronics manufacturing. Given the promising future, investing in semiconductor stocks like NVIDIA Corporation NVDA, Broadcom Inc. AVGO, MACOM Technology Solutions Holdings, Inc. MTSI and Semtech Corporation SMTC should be a wise decision. Each of these stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.Semiconductor Sales Soar on Robust DemandThe Semiconductor Industry Association (SIA) said on Tuesday that global semiconductor sales totaled $57.8 billion in November, jumping 20.7% from the year-ago levels and 1.6% sequentially from October’s total of $56.9 billion.John Neuffer, SIA president and CEO, said, “The global semiconductor market continued to grow substantially in November, hitting its highest-ever monthly sales total as month-to-month sales increased for the eighth consecutive month.” The ongoing enthusiasm surrounding AI, particularly generative AI, has been fueling demand for semiconductors across a variety of industries. The robust performance of tech stocks, which contributed to last year’s broader market rally, is primarily being driven by NVIDIA. The company has established itself as a leader in the generative AI field, triggering widespread interest and advancements in this sector.AI Enthusiasm to Continue Boosting Chip DemandA large number of tech companies have been spending aggressively on AI and its development. Companies that have heavily incorporated AI into their products have witnessed substantial growth over the past couple of years.On Friday, Microsoft Corporation MSFT announced plans to invest $80 billion in AI-powered data centers for fiscal 2025 to manage AI workloads. Microsoft isn't alone in making significant investments in AI; several other tech giants are also putting billions into NVIDIA graphics processing units to train and operate AI models.Experts believe AI holds vast untapped potential, with much to be explored. This soaring enthusiasm is expected to boost demand even further as more semiconductor companies enter the AI race.AI-specific chips have become essential as their use expands across multiple sectors, ranging from high-performance computing to everyday consumer gadgets. Additionally, memory components like NAND flash and DRAM are experiencing a resurgence in demand, addressing more specialized computing requirements and supporting AI-intensive tasks. Given this situation, semiconductor stocks are poised to gain in the near term.4 Semiconductor Stocks With Growth PotentialNVIDIA CorporationNVIDIA Corporation is a major player in the semiconductor industry and has been one of the standout success stories of 2023 and 2024. As a leading designer of graphic processing units (GPUs), the value of the NVDA stock tends to surge in a thriving crypto market. This is primarily due to the crucial role that GPUs play in data centers, artificial intelligence and the mining or production of cryptocurrencies.NVIDIA’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 4.3% over the past 60 days. Currently, NVIDIA has a Zacks Rank #2.Image Source: Zacks Investment ResearchBroadcom Inc.Broadcom Inc. is a premier designer, developer and global supplier of a broad range of semiconductor devices with a focus on complex digital and mixed signal complementary metal oxide semiconductor-based devices and analog III-V-based products. AVGO is steadily solidifying its presence in the AI chip market. Broadcom’s Ethernet AI solutions have seen a 400% increase year over year, and its Accelerators business has grown by 350%.Broadcom’s expected earnings growth rate for the current year is 29.4%. The Zacks Consensus Estimate for the current-year earnings has improved 2.9% over the past 60 days. AVGO currently has a Zacks Rank #2.Image Source: Zacks Investment ResearchMACOM Technology Solutions Holdings, Inc.MACOM Technology Solutions Holdings, Inc. is a provider of power analog semiconductor solutions to varied markets. MTSI develops and produces analog radio frequency, microwave and millimeter wave semiconductor devices, and components for applications in optical, wireless and satellite networks. MACOM Technology Solutions Holdings primarily serves three markets, namely, data center, industrial & defense and telecom.MACOM Technology’s expected earnings growth rate for the current year is 31.6%. The Zacks Consensus Estimate for current-year earnings has improved 2.1% over the past 60 days. MTSI has a Zacks Rank #2.Image Source: Zacks Investment ResearchSemtech CorporationSemtech Corporation designs, manufactures and markets a wide range of analog and mixed-signal semiconductors for commercial applications. SMTC’s product line comprises Signal Integrity Products, Protection Products, Power and High-Reliability Products, Wireless and Sensing Products, and Systems Innovation Group.Semtech’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings improved 14.9% over the past 60 days. SMTC presently carries a Zacks Rank #2.Image Source: Zacks Investment Research7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.1% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Microsoft Corporation (MSFT): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis Report Semtech Corporation (SMTC): Free Stock Analysis Report Broadcom Inc. (AVGO): Free Stock Analysis Report MACOM Technology Solutions Holdings, Inc. (MTSI): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks