2024 Semiconductor Stocks Picking Guide: 10 Must-Watch Chip Giants for Smart Investors

The Chip Shortage Is Over—Now It’s Time to Pick Winners

Remember when semiconductor stocks were the darling of every portfolio? After years of ups and downs, the semiconductor industry is entering a new recovery cycle in 2024. Whether you’re looking to ride the AI wave with GPU leaders or bet on steady manufacturing equipment suppliers, we’ve identified 10 semiconductor stocks worth tracking this year.

The semiconductor sector has matured into distinct business models: pure-play chip designers (Fabless), foundries that manufacture chips, equipment suppliers, and integrated manufacturers. Each category offers different risk-reward profiles for investors with varying risk appetites.

The AI Boom: GPU and Processor Powerhouses

NVIDIA (NVDA) has become the undisputed leader in AI infrastructure. With a market cap of $2.2 trillion as of May 2024, NVIDIA’s stock surged 205.97% over the past year, reaching new highs. The company’s dominance in data center GPUs and autonomous vehicle solutions positions it perfectly for the ongoing AI revolution. However, such rapid gains warrant caution—a potential correction is always possible.

Advanced Micro Devices (AMD) offers a compelling alternative for investors seeking exposure to processor growth without concentration risk. AMD posted 58.05% year-over-year gains, reaching $152.39, by establishing strategic partnerships with Microsoft, Sony, and Apple. Unlike NVIDIA’s explosive growth, AMD provides more moderate appreciation with less downside volatility.

The Foundry and Design Tier: Stable but Strategic

Taiwan Semiconductor Manufacturing (TSM), with a $642 billion market cap, remains the backbone of global chip production. Its 1.13% dividend yield and moderate 26.86 P/E ratio make it attractive for income-focused investors. As geopolitical tensions persist around chip manufacturing, TSM’s dominant position ensures long-term relevance.

Broadcom (AVGO) dominates telecommunications and data storage semiconductors, posting a 109.89% annual return and reaching $1,305.67. The company’s aggressive acquisition strategy has expanded its product portfolio, while its exposure to emerging technologies like AI keeps growth prospects intact.

Qualcomm (QCOM) controls 53% of the 5G processor market—a commanding position that generates both licensing royalties and product revenue. Trading at $180.51 with a 68.73% annual gain, QCOM benefits from the global rollout of 5G infrastructure and IoT expansion.

The Equipment Layer: The Picks and Shovels Play

ASML (ASML) is the world’s sole supplier of extreme ultraviolet (EUV) lithography machines—essentially the “picks and shovels” of chip manufacturing. With a 40% annual gain and $913.54 stock price, ASML’s monopoly ensures stable demand as all major foundries invest in next-generation manufacturing capacity.

Applied Materials (AMAT) supplies the tools that build semiconductor fabs. A 78.61% annual surge brought the stock to $206.33, while its expanding P/E ratio (now at 24.39) suggests the market is pricing in sustained growth from 5G, IoT, and AI infrastructure buildout.

Lam Research (LRCX) holds 50% market share in etching equipment—a critical step in chipmaking. The 73.16% annual return to $907.54 reflects strong demand from both memory expansion and leading-edge logic manufacturing.

The Established Leaders: Reliability Over Growth

Texas Instruments (TXN) generates stable profits selling analog and embedded processing chips to industrial, automotive, and consumer electronics customers. While a 9.75% annual gain ($185.32) may seem modest compared to peers, TXN’s 28.67 P/E ratio and fortress balance sheet appeal to conservative investors seeking stability.

Intel (INTC) remains the PC processor leader despite facing competitive pressure. At $30.09 with a 31.25 P/E ratio, Intel’s stock has been hammered but shows signs of recovery. Future catalysts include automotive chip demand and potential market share gains as rivals face supply constraints.

Micron Technology (MU) controls critical memory markets: 22.52% DRAM share, 11.6% NAND flash share, and 5.4% NOR flash share. A 90.26% annual jump to $117.81 reflects market optimism about memory chip demand recovery.

What Moves Semiconductor Stock Prices?

Inventory levels are the leading indicator—rising stockpiles signal weak demand; falling inventory suggests supply constraints will drive prices higher.

Technological breakthroughs create winners and losers overnight. Companies advancing EUV lithography, AI chip specialization, or process node transitions capture market enthusiasm.

Cyclical demand shifts in consumer electronics, data centers, automotive, and IoT create 4-5 year boom-bust cycles. The current cycle bottomed in Q1-Q2 2024, suggesting 6-9 months of stock appreciation ahead.

Geopolitical risk surrounding Taiwan and chip exports remains a wild card that can instantly reshape valuations.

Timing Your Entry: The Cycle Perspective

Semiconductor stocks typically peak, then suffer a 30-50% decline over 2-3 years before recovery. The February-March 2024 rally already pushed valuations higher—exercise patience before adding positions in early gainers like NVDA and AMAT.

Conservative investors should consider accumulating TXN and AVGO during weakness, while growth-oriented traders can time entries into AMD and LRCX after minor pullbacks.

The Bottom Line on Semiconductor Stock Investing

The 2024 semiconductor stocks landscape offers opportunities across multiple segments. Equipment suppliers like ASML and AMAT benefit from capex cycles, foundries like TSM provide ballast, while GPU leaders like NVIDIA deliver outsized gains for risk-tolerant investors.

Your semiconductor stocks selection should align with your risk tolerance: Choose TSMC or TXN for safety, AMD or QCOM for balanced growth, and NVIDIA or AMAT for aggressive upside. Diversifying across the semiconductor industry chain—designers, manufacturers, and equipment suppliers—provides the best risk-adjusted returns.

Remember: Past performance doesn’t guarantee future results. Consult with a financial advisor and conduct your own due diligence before committing capital to semiconductor stocks or any investment.