Stock market juggernauts Nvidia and Broadcom have pulled back slightly from their all-time highs, but their market capitalizations are still up enormously this year on investor excitement over artificial intelligence (AI). Nvidia completed its latest stock split in June while Broadcom is scheduled to split its stock 10-for-1 on July 15.

Those two are helping lead the tech sector to new heights, but they aren’t alone. Intel (INTC 0.38%), Micron Technology (MU 2.81%), and On Semiconductor (ON -1.48%) may be even better growth stocks to buy now. Here’s why.

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Combining growth with value

Daniel Foelber (Intel): There’s no sugarcoating it — Intel stock has had an abysmal year. While most of its semiconductor peers have been riding party boats down the river, Intel suffered a 38% year-to-date decline. That made it the worst-performing component in the Dow Jones Industrial Average — even worse than Boeing with all of its woes.

However, Intel is undergoing a significant makeover, both as a company and as a stock. In the past, Intel shares offered high yields, and the company was focused on slow and steady growth. But in spring 2023, it slashed its dividend by two-thirds and now yields just 1.6%.

Management’s plan is to reallocate funds that would have been used to pay dividends toward long-term growth projects — namely, building fabs across the U.S. and investing in artificial intelligence (AI) products.

If the strategy works, investors could fare far better than they would have if the chipmaker had stuck with its prior formula, which produced high dividends but a stagnating stock price. However, anytime a company embarks on this kind of strategic shift, it often tests investor patience. Intel deserves to be in “prove it” mode, so it wouldn’t be surprising if the stock continued to underperform its peers (at least in the short term).

What the stock has going for it is an attractive valuation. Analysts’ consensus estimates call for earnings of $1.02 per share in 2024 and $1.81 per share in 2025. That gives Intel a dirt-cheap 17.3 price-to-earnings (P/E) ratio based on 2025 estimates. Granted, a lot could go wrong between now and then. However, the optimistic forecast indicates investors may not have to wait too long for Intel’s earnings to soar.

New facilities to help power growth

Scott Levine (Micron Technology): When you’re standing around the water cooler discussing AI stocks, it’s likely you’ll hear the same group of names mentioned repeatedly — and Micron Technology probably won’t be among them.

However, that doesn’t mean it’s unworthy of serious consideration by those on the prowl for compelling AI investments. The company is at the vanguard of developing memory and storage solutions that are suited for a variety of applications, including data centers and mobile devices.

In pursuit of growth, Micron is developing two new production facilities in Idaho and New York, the construction of which is being supported by up to $6.1 billion in federal grants funded through the CHIPS and Science Act. Micron expects the Idaho facility to commence operations in its fiscal 2027 (Micron’s fiscal years begin in September), with production at the New York site starting as soon as 2028.

This positions the company well for the coming years since its high bandwidth memory products are already sold out for calendar years 2024 and 2025. While Micron provides a variety of memory and storage solutions, its high bandwidth memory products are especially noteworthy since Nvidia is a key customer — it relies on Micron’s high-capacity memory solution, the HBM3E, in its H200 Tensor Core graphics processing card.

Like many semiconductor manufacturers, Micron has been experiencing impressive growth recently. Whereas it reported $1.3 billion in operating cash flow for the first three quarters of fiscal 2023, it generated $5.1 billion for the same period in fiscal 2024. As a leader in memory and storage solutions and as a key supplier to Nvidia, Micron should glow brightly on the radars of investors seeking worthwhile semiconductor tickers.

Long-term growth, near-term challenges

Lee Samaha (ON Semiconductor): ON Semicionductor’s end markets are having a challenging year, and that’s why its share price is down more than 11% in 2024 as I write.

Management made a conscious decision to focus on the automotive and industrial end markets, and in doing so, it exposed itself to the cyclical risk that both markets might be weak at the same time. That’s pretty much what’s happening this year. On the earnings call in April, CEO Hassane El-Khoury said he remained “cautious about the second half outlook, but we expect customer inventory levels to normalize and the market to stabilize.”

El-Khoury’s cautiousness is unsurprising. Relatively high interest rates have slowed the growth in electric vehicle (EV) sales and are causing automakers to hold back on investment. At the same time, industrial automation companies are finding that their customers are taking longer than expected to work through their inventories and place new orders.

Wall Street’s consensus forecast is that ON Semiconductor’s sales will decline by 12.5% in 2024. However, despite that near-term doom and gloom, its end markets are highly likely to grow over the long term. EVs are the future of the car industry, and industrial automation is the future of manufacturing — at least, it is if you want to reshore production from low-labor-cost countries and take full advantage of digital technology in manufacturing.

ON Semiconductor trades at an excellent valuation today. It’s not often you get to buy a growth stock trading at less than 20 times estimated free cash flow, and I think that makes this hardware maker worth buying for enterprising investors.