Hundreds of billions of dollars in artificial intelligence-related spending could flow to chip companies next year. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium expertoption forex broker overview services. Semiconductor companies that develop GPUs and other specialized AI hardware are poised to benefit immensely from this trend.
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According to Deloitte, as of 2020, the average passenger vehicle included $475 in chips, while a cellphone had $340. Not only are they in everything, but are big everywhere, effectively providing diversity through exposure to economic and geographic sectors. Broadcom is currently knocking on the door of the exclusive $1 trillion club, which is home to just six U.S. technology giants right now. Huang believes AI is increasingly becoming broadcom inc and morgan stanley to host broadband teach a commodity, and these AI factories are pivotal in accelerating demand for generative AI training and inference.
Key factors
For the fiscal year ended October 29, dividends and stock buybacks were $13.5 billion, in line with historical levels, but still 75% of all its cash flow from operations. AVGO has always been a dividend grower, increasing the payout from $13 in 2020 to an indicated $21 for 2024, or 12.7% average annually. As the company blossoms, there are a host of others riding its coattails in related businesses. Here we look at some of the publicly traded firms in the AI ecosystem whose growth is predicated on Nvidia’s growth as well as growth in the AI market in general.
Spectrum-X is a new market offering aimed at scaling AI to Ethernet-only data centers. Emerging semiconductor companies focusing on IoT will need to innovate to create smaller, more efficient, and more powerful chips to meet the evolving needs of this market. As IoT applications expand, the demand for advanced, energy-efficient chips that can handle the diverse and high-volume data processing requirements will surge. Semiconductor companies design and manufacture computer chips and related components. They are part of the technology sector but are also manufacturing businesses, which means their businesses are cyclical, like any industrial business. Long-term debt is just $8.5 billion, which is less than a third of the $26 billion in cash and cash equivalents at the beginning of fiscal 2024.
- Since its opening as a public company through its fiscal year 2022—31 years—TSMC has seen revenue CAGR (compound annual growth) of 20.4% and net income CAGR of 23.7%, according to data from S&P Global Market Intelligence.
- Needham & Company LLC reaffirmed a “buy” rating and issued a $210.00 price target on shares of Taiwan Semiconductor Manufacturing in a report on Thursday, October 17th.
- Semiconductors power a wide range of devices, including PCs, gaming consoles, phones, cars, and industrial machines, and many of those platforms require a growing number of chips with every upgrade.
- This is a good and provocative result, since during the same five-year period, sales have “merely” doubled to just over $7 billion, with the number of outstanding shares remaining more or less constant.
- Before you decide to purchase any of these stocks, do plenty of research to ensure they are aligned with your financial goals and risk tolerance.
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Second, Qualcomm owns the world’s largest portfolio of wireless patents, which entitles it a cut of every smartphone sold worldwide. Its dominance of both the mobile chip and licensing markets made it a popular target for antitrust regulators in the past, but it’s resolved most of those issues and remains well-poised to profit from the growth of the 5G market. NVIDIA also plans to buy Arm Holdings from Softbank, which provides the chip designs for most of the world’s mobile chips. If the deal is approved, NVIDIA will receive royalties and licensing fees from every producer of Arm-based chips worldwide — including Apple, Qualcomm, MediaTek, and Huawei. ASML will launch even more advanced EUV systems, called high-NA systems, over the next few years to manufacture 3nm and 2nm chips between 2022 and 2025. That roadmap directly aligns with TSMC’s, and it will enable ASML to remain one of the industry’s most important equipment makers for the foreseeable future.
That being said, some chip designers are able to protect their work with patents that are not easy to replicate by other means. This can first digital currency payments solution deployed by coinmarketcap create a type of moat for the company’s long-term growth, although it doesn’t completely prevent up-and-down sales cycles. In 2024, Nvidia clocked new revenue records, driven largely by growth in their data center segment, which CEO Jensen Huang terms “AI factories.” Nvidia (NVDA -3.22%) has positioned itself as the platform for all types of AI largely thanks to its portfolio and the powerful H100 Tensor Core GPU, putting it in a pole position to pursue new markets and expand revenue.
Lastly, with its diversified approach towards computing, IoT and AI, Intel is strategically moving to regain its leadership position in the semiconductor industry. Each company’s position within the industry, technological advancements and growth prospects in emerging sectors such as AI, IoT and 5G technologies were also evaluated. This involved examining market trends, regulatory impacts and competitive landscapes to pinpoint companies with a strategic edge for long-term growth. The approach aimed to identify semiconductor stocks that are well-positioned for growth based on a combination of current financial performance and strategic market positioning.
Micron Technology stands out as one of the best semiconductor stocks for 2024, poised to capitalize on several key industry trends. As digital transformation accelerates globally, the demand for memory and storage solutions is skyrocketing, driven by technological advancements such as artificial intelligence, 5G, cloud computing, and the IoT. Micron is well-positioned to meet this surging demand with its leading-edge DRAM and NAND technologies. Nvidia continues to dominate in the realms of AI and gaming, with its GPUs becoming increasingly indispensable for data centers and autonomous technologies.
It will be based on a new architecture called Compute DNA (CDNA) 4, which could deliver 35 times more performance than CDNA 3 chips like the MI300. Coming into Q3, Broadcom is expected to deliver $51 billion in total revenue for fiscal 2024, with $11 billion attributable to AI. However, following the strong results I just highlighted, the company revised those numbers higher to $51.5 billion and $12 billion, respectively.