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3 Semiconductor Stocks to Buy for the Next Bull Run: March 2024

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Artificial intelligence (AI) continues to be a catalyst that’s driving the stock market higher and semiconductor stocks are the main beneficiaries of the AI trade. In his weekly newsletter, analyst Charlie Bilello notes that semiconductor stocks have “trounced every other industry group in the last 10 years, rising 10x.” He compares the growth of semiconductor stocks to the Nasdaq 100, up 4.3x, and gold and energy, each are up 1.5x since 2014.

Bilello also states that “semiconductor chips have become the new oil,” and highlights that the leading iShares Semiconductor ETF (NASDAQ:SOXX) has gained 825% in the past 10 years versus a 37% gain for the Energy Select Sector SPDR (NYSEARCA:XLE) ETF. Clearly semiconductor stocks have been a good place for investors to have capital. The question now is, will semiconductor stocks continue marching higher after such a strong bull run? Likely yes, but there might be some rotation into different semiconductor names moving forward. Here are three semiconductor stocks to buy for the next bull run: March 2024.

Astera Labs (ALAB)

Person holding smartphone with logo of U.S. semiconductor company Astera Labs Inc. (ALAB) on screen in front of website. Focus on phone display. Unmodified photo.

Source: T. Schneider / Shutterstock.com

Astera Labs (NASDAQ:ALAB) is literally the newest semiconductor stock on the block, having held its initial public offering (IPO) on March 20. By all accounts, the IPO was a success and ALAB stock is up 35% since its first trade. While not as well known to many investors, the company has many merits. Astera Labs is a major player in AI, counts Nvidia (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD) as customers, and is growing at a fast rate.

While not yet profitable, Astera Labs’ finances are moving in the right direction. The company recorded a net loss of $26.3 million in 2023. However, that loss was much less than the loss of $58.3 million recorded a year earlier. Also, Astera Labs’ revenue continues to grow rapidly, having risen 45% year-over-year in 2023 to $115.8 million from $79.9 million in 2022. Profitability is within sight for the semiconductor concern.

Astera Labs makes high-speed data transfer technology for AI computing and cutting-edge data centers. The company’s direct competitors include other high-flying microchip and semiconductor companies such as Broadcom (NASDAQ:AVGO). However, investors can buy newly listed ALAB stock at a much cheaper price and valuation than more established chip stocks.

Arm Holdings (ARM)

ARM company logo or ARM Holding plc logo on smartphone hardware. is a British semiconductor and software design company owned by SoftBank group

Source: Poetra.RH / Shutterstock.com

The second newest semiconductor stock is Britain’s Arm Holdings (NASDAQ:ARM), which went public last September. Another successful market debut, ARM stock has more than doubled over its first six months of trading, having risen 112%. The share price really took off after the company issued financial results in February that showed it is already profitable and beating Wall Street expectations on strong AI demand for its chips.

The company announced fourth quarter 2023 earnings per share (EPS) of 29 cents versus 25 cents that was expected among analysts. Revenue exceeded Wall Street forecasts, coming in at $824 million, topping $761 million. Arm Holdings also provided bullish guidance and said that it is seeing growing demand for its microchips due to the rise of AI applications and models. Investors couldn’t buy ARM stock fast enough.

ARM stock is interesting because its microchips can be found in nearly every smartphone and many computers around the world. In the final quarter of last year, Arm shipped nearly eight billion microchips to customers. The company makes money on royalty payments, which rose 11% on an annual basis to $470 million last quarter.

Taiwan Semiconductor Manufacturing Co. (TSM)

Taiwan Semiconductor, TSMC (TSM) on phone screen stock image.

Source: sdx15 / Shutterstock.com

JPMorgan Chase (NYSE:JPM) recently issued a bullish analysis of Taiwan Semiconductor Manufacturing C0. (NYSE:TSM), claiming that the stock is trading at a 50% discount despite dominating over 90% of the global AI chip market. JPMorgan strongly recommends TSM as a semiconductor stock to buy, citing 9% upside to the current share price and significant future growth opportunities. So far in 2024, TSMC, as the company is known, has seen its stock rise 37%.

Despite the big gain, JPMorgan argues that TSMC is still undervalued relative to its dominance in microchip and semiconductor manufacturing, and that the stock still has room to run. Others on Wall Street are also bullish on TSM stock as demand for AI chips and semis grows exponentially and as other segments, such as personal computer manufacturing, recover from the downturn they experienced after the pandemic ended.

TMSC faces some geopolitical risks as it is based in the dispute territory of Taiwan. However, the company is expanding its operations to get out from under the shadow of China, recently opening a new manufacturing plant in Japan and preparing to build a new one in the U.S. as well.

On the date of publication, Joel Baglole held a long position in NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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