4 Solid Semiconductor Stocks to Gain From Soaring Sales

The semiconductor market has recovered steadily over the past few months and sales are up from the year-ago levels. Soaring demand from many industries has been driving sales lately after a difficult first half of 2023.

The Semiconductor Industry Association (SIA) reported on Mar 4 that global semiconductor sales totaled $47.6 billion in January, increasing a solid 15.2% year over year from $41.3 billion. Although monthly sales unexpectedly fell marginally by 2.1%, the semiconductor market is on track for a steady recovery.

Regionally, sales increased 26.6% in China, 20.3% in the Americas and 12.8% in Asia Pacific on a year-over-year basis.

John Neuffer, SIA president and CEO, said, “The global semiconductor market started the new year strong, with worldwide sales increasing year-to-year by the largest percentage since May 2022.”

“Market growth is projected to continue over the remainder of the year, with annual sales forecast to increase by double-digits in 2024 compared to 2023,” he added.

Robust semiconductor sales during the peak of the pandemic were followed by a dull period. Rising costs, supply-chain crisis and higher interest rates due to the Federal Reserve’s aggressive monetary tightening campaign to tame soaring inflation worked as tailwinds for the industry as demand slowed during the second half of 2022.

However, as inflation started to cool, price pressures eased, which started boosting demand. Also, the ongoing enthusiasm surrounding AI is likely to drive semiconductor sales in the near term.

Semiconductor products across segments saw robust sales in 2023. Logic products emerged as the leading category, with sales totaling $178.5 billion, while memory products totaled $92.3 billion in sales. Sales of microcontroller units (MCUs) grew 11.4%, totaling $27.9 billion.

Our Choices

Given the promising future, it would be wise to invest in semiconductor stocks like NVIDIA Corporation NVDA ,ACM Research, Inc. ACMR, Applied Materials, Inc. AMAT and Lam Research Corporation LRCX, which investors can gain from in the near term.

NVIDIA Corporation is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit (GPU). Over the years, NVDA’s focus has evolved from PC graphics to AI-based solutions that now support high-performance computing, gaming and virtual reality platforms. NVIDIA’s GPU success can be attributed to its parallel processing capabilities supported by thousands of computing cores necessary to run deep-learning algorithms.

NVIDIA’s expected earnings growth rate for next year is 11%. The Zacks Consensus Estimate for current-year earnings has improved 16.4% over the past 60 days. NVDA currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

ACM Research, Inc. develops, manufactures and sells single-wafer wet cleaning equipment, which semiconductor manufacturers can use in numerous manufacturing steps to remove particles, contaminants and other random defects. ACMR is headquartered in Fremont, CA.

ACM Research’s expected earnings growth rate for next year is 38.9%. The Zacks Consensus Estimate for current-year earnings has improved 24.6% over the past 60 days. ACMR presently sports a Zacks Rank #1.

Applied Materials, Inc. is one of the world's largest suppliers of equipment for the fabrication of semiconductors, flat panel liquid crystal displays, and solar photovoltaic cells and modules. AMAT also offers deployment and support services related to the equipment supplied.

Applied Materials’ expected earnings growth rate for next year is 14.9%. The Zacks Consensus Estimate for current-year earnings has improved 5.7% over the past 60 days. AMAT presently carries a Zacks Rank #2.

Lam Research Corporation supplies wafer fabrication equipment and services to the semiconductor industry. LAM’s products are used by semiconductor manufacturers in front-end and WLP processes, creating memory, microprocessors, and other logic-integrated circuits for a broad range of electronic devices.

Lam Research Corporation’s expected earnings growth rate for next year is 19.9%. The Zacks Consensus Estimate for current-year earnings has improved 4.9% over the past 60 days. LRCX presently has a Zacks Rank #2.

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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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