Janice R. Andrews
Global consulting company McKinsey & Company has predicted that the semiconductor business would explode into a massive $1 trillion sector by the end of this decade, a prediction that may drastically alter the financial environment. Even if this estimate is high, it makes sense considering the present semiconductor market’s already enormous $500 billion valuation.
Artificial intelligence (AI) is emerging as a key driver of this explosive expansion in the semiconductor industry. According to McKinsey, artificial intelligence (AI) is one of the key factors expected to drive semiconductor growth in the upcoming years, offering investors several opportunity to profit from this rapidly expanding sector. In light of this paradigm change, we examine three top stocks that are now well-positioned for investing.
AMD (Advanced Micro Devices):
While Nvidia is the industry leader in the production of AI chips, Advanced Micro Devices (AMD) is a strong competitor as well. An important turning point was reached when AMD unveiled the Instinct MI300 graphics processing units (GPUs) in December 2023. With the tagline “highest-performance accelerators in the world for generative AI,” IT giants like Microsoft, Meta Platforms, and Oracle have already expressed interest in these chips.
With CEO Lisa Su emphasizing the growing potential of AI personal computer (PC) processors, AMD’s goals go beyond the server industry. The president of AMD, Victor Peng, highlights the company’s competitive advantage in AI PCs, highlighting its encouraging AI trajectory. Even if revenue is expected to be lower than expected in the first quarter of 2024, AMD still has strong long-term growth prospects because to the expanding AI market.
Applied Materials: Symbol AMAT (NASDAQ):
Applied Materials seems as a classic “picks-and-shovels” play in the semiconductor business, drawing comparisons to the gold rush era. With Applied Materials’ focus on semiconductor fabrication equipment and provision of auxiliary services and consulting, the company is well-positioned to take advantage of the growing need for chip production infrastructure.
Applied Materials’ growth thesis is presented by CEO Gary Dickerson, who highlights the mutually beneficial link between the company’s trajectory and the growth of the semiconductor market. With a growing service business and a strategic focus on wafer manufacturing, Applied Materials provides investors with a variety of ways to profit from the expansion of the semiconductor market.
Broadcom (AVGO, NASDAQ):
In the world of semiconductors, Broadcom is a major player as the third-biggest chipmaker. Since a sizable amount of Broadcom’s semiconductor income now comes from AI, the company expects the AI surge to spur more growth. With the recent acquisition of VMware, Broadcom is now better positioned to benefit from the data and application transfer to the cloud, which will accelerate its growth prospects in line with the spread of artificial intelligence.
In addition to its promising growth prospects, Broadcom offers an alluring dividend offering, having raised its payment for 13 years in a row. When combined with bright growth potential, Broadcom becomes an appealing investment option for astute investors.
The coming together of AI with semiconductor technology promises to be a game-changer, propelling the semiconductor industry beyond previously unheard-of heights. With businesses leading the way in this transformation, such as Broadcom, Applied Materials, and Advanced Micro Devices, investors may profit handsomely from well-timed bets in this emerging industry.
*Investors are urged to carefully evaluate their financial goals and perform research before making any choices on their investments.*
