Semiconductor stocks are a buy as the Nasdaq continues to make higher highs. These companies have been benefiting from the growing demand for electronic devices and the increased adoption of various technologies, such as artificial intelligence, cloud computing, and 5G.
The semiconductor industry’s ability to continuously innovate and develop more efficient, smaller, and faster chips is a reason investors should follow this industry closely.
Generally, semiconductor stocks outperform all others in the Nasdaq composite, so if one wants to have market-beating returns, then a sizable investment into this industry could be suitable. Although the ups and downs of the industry may be significant, I feel that the rewards far outweigh the risks involved.
So with this backdrop in mind, here are seven semiconductor stocks that I feel have a reasonable chance of turning $100,000 into $1 million within seven years. Don’t miss out on this opportunity or you may end up regretting it.
Advanced Micro Devices (AMD)
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Advanced Micro Devices (NASDAQ:AMD) has experienced a significant share price increase of 84.66% over the past year. This surge is part of the company’s strategic shift from focusing on traditional PC sales to emphasizing artificial intelligence (AI).
AMD’s growth in the AI sector is propelled by its Instinct MI300 accelerators, which aim to deliver an eightfold improvement in AI training performance compared to older models. The company anticipates generating around $2 billion from AI chip sales.
There is a strong market interest in AMD’s new offerings, with several large hyper-scale customers, potentially including high-profile companies such as Meta Platforms (NASDAQ:META), OpenAI, and Microsoft (NASDAQ:MSFT).
What makes AMD a buy for me is that it has courted the attention of Wall Street analysts, as well as reaching meme stock status. It could then easily become a multibagger due to these combination of factors, which makes it one of those semiconductor stocks to buy.
Silicon Laboratories (SLAB)
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Silicon Laboratories (NASDAQ:SLAB) is another one of those semiconductor stocks that investors should consider but it’s a different beast to the marquee names.
The reason I like SLAB is that it has a concentration into the IoT market, and also has a diversified base of earnings from customers from different industries. This diversification could provide a more stable earnings base compared to companies solely dependent on the more cyclical semiconductor industry.
However, SLAB’s shares have seen a significant decline of 21.24%% over the past year. This is where my thesis kicks in, as I believe that SLAB is undervalued when compared to its long-term potential.
Although its P/E ratio is negative, it trades for just 5 times its sales, and looking ahead, analysts predict that it will reach breakeven profitability in the near future.
This then makes SLAB one of those semiconductor stocks that could turn $100,000 to $1 million as its fundamentals improve.
Monolithic Power Systems (MPWR)
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Monolithic Power Systems (NASDAQ:MPWR) is a company that has momentum firmly on its side. I covered MPWR back in November last year, and it has since gained around 20% at the time of writing.
I remain firmly bullish on the potential of MPWR for the following reasons. First, the company’s management has projected a top-line growth of about 12% annually over the next three years, and analyst expectations are even more bullish.
Namely, analysts predict that MPWR’s EPS will increase around 49% this year, and there is incremental growth expected for this company moving forward.
Despite its market cap of around $30 billion, I think that it still has plenty of room for growth, as evidence by its long-term growth prospects that have been guided by management. It’s then one of those semiconductor stocks to investors to consider.
Intel (INTC)
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Intel (NASDAQ:INTC) has made a significant move with the introduction of its Falcon Shores GPU, designed specifically for AI-accelerated data centers.
To get the most out of the AI craze, it’s also leveraging significant capital expenditure. This includes a substantial $20 billion investment in constructing two new chip fabrication facilities in Ohio.
I think that INTC also falls under meme stock status due to being the primary underdog of Nvidia (NASDAQ:NVDA) in the chips arms race, which is a positive contributing factor when considering a semiconductor stock to buy.
And despite it’s underdog status, I think it has a strong possibility of remaining competitive thru the announcement of its new AI chip. The chip, named Gaudi 3, boasts a 50% performance increase over Nvidia’s older H100 model in inference applications and offers 40% greater power efficiency at a lower cost. This is embelic of its ongoing efforts to carve out a space in the competitive AI accelerator market.
Magnachip Semiconductor (MX)
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Magnachip Semiconductor (NYSE:MX) designs and manufactures analog and mixed-signal semiconductors.
I think that MX is primed for a rebound despite its stock price falling 40.55% over the past year.
Analysts are forecasting a revenue uptick from approximately $240 million to $290 million in 2024, with estimates ranging from a low of $265 million to one analyst’s projection of $380 million for 2025.
Furthermore, Magnachip boasts a net cash per share of around $4.2, alongside an active buyback program, having repurchased $25 million worth of shares in the last quarter and announcing an additional $50 million allocation.
If investors want to 10x their investment, it makes sense that risky investments are indeed that have high implied volatility. MX then ticks this box well, and I think it’s long-term prospects make it an attractive investment that should not be overlooked by those with strong ambitions in the industry.
Hua Hong Semiconductor (HHUSF)
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Hua Hong Semiconductor (OTCMKTS:HHUSF) is one of the most prominent semiconductor stocks and chip foundries in China, and thus is worthy of one’s consideration.
In 2023, the company achieved a milestone by obtaining approval for a $2.6 billion listing on the Shanghai Stock Exchange, the largest in China for the year. I think this move will expected to enhance its future positioning.
My thesis for HHUSF and other Chinese semiconductor stocks on this list is due to China’s turn to high-tech manufacturing and increase in internal consumption by the government’s top brass. HHUSF is employing its $2.6 billion listing to fuel its expansion and concentrate on specialized semiconductor technologies, and I believe that the majority of those chips will go towards China-based firms.
As the premier foundry in China, HHSUF will be vital in producing some of the components needed to fuel China’s high-tech pivot, and trading at around $2 per share, I think it has multibagger potential.
Intchains Group (ICG)
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Intchains Group (NASDAQ:ICG) is a provider of high-performance computing ASIC chips and software. ICG also has a notable presence in the blockchain industry, and is therefore tied to the ongoing and exponential growth of cryptocurrencies such as Bitcoin (BTC-USD).
There are a few reasons I think that ICG could be an outperformer. For one, The company recently acquired assets from the Goldshell brand, based in Singapore, for $550,000. This acquisition includes intellectual property essential for Web3 infrastructure.
It also has $97 million in cash and short-term investments and minimal liabilities totaling $1.9 million. One can say that its fundamentals are strong, and due to its expanding presence in Web3, the future is accretive.
ICG is another company based in China, and despite the country outlawing Bitcoin mining, it remains as a key player in the industry and will continue to do so for the foreseeable future. ICG along with HHUSF could then be complementary plays in the industry.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
