Semiconductors are the driving force behind the digital revolution. Despite this, the industry is subject to the ups and downs of the broader economy because customers often stockpile chips ahead of demand, and investors seem to believe the market is overheated as semiconductor stocks have shed 8% over the past six months. This drop is a noticeable divergence from the S&P 500’s 10.1% return.
The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. With that said, here are three resilient semiconductor stocks at the top of our wish list.
Nvidia (NVDA)
Market Cap: $3.43 trillion
Founded in 1993 by Jensen Huang and two former Sun Microsystems engineers, Nvidia (NASDAQ:NVDA) is a leading fabless designer of chips used in gaming, PCs, data centers, automotive, and a variety of end markets.
Why Will NVDA Outperform?
Market share has increased this cycle as its 99.1% annual revenue growth over the last two years was exceptional
Incremental sales significantly boosted profitability as its annual earnings per share growth of 86% over the last five years outstripped its revenue performance
NVDA is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its recently improved profitability means it has even more resources to invest or distribute
Nvidia’s stock price of $139.80 implies a valuation ratio of 36.9x forward price-to-earnings. Is now the time to initiate a position? Find out in our full research report, it’s free.
AMD (AMD)
Market Cap: $204.9 billion
Founded in 1969 by a group of former Fairchild semiconductor executives led by Jerry Sanders, Advanced Micro Devices (NASDAQ:AMD) is one of the leading designers of computer processors and graphics chips used in PCs and data centers.
Why Are We Positive On AMD?
Impressive 32.2% annual revenue growth over the last five years indicates it’s winning market share this cycle
Exciting sales outlook for the upcoming 12 months calls for 28.1% growth, an acceleration from its two-year trend
Earnings per share grew by 50.4% annually over the last five years, massively outpacing its peers
At $125.06 per share, AMD trades at 25.6x forward price-to-earnings. Is now a good time to buy? Find out in our full research report, it’s free.
Broadcom (AVGO)
Market Cap: $1.12 trillion
Originally the semiconductor division of Hewlett Packard, Broadcom (NASDAQ:AVGO) is a semiconductor conglomerate spanning wireless communications, networking, and data storage as well as infrastructure software focused on mainframes and cybersecurity.
Why Will AVGO Beat the Market?
Annual revenue growth of 24.6% over the last two years was superb and indicates its market share increased during this cycle
Superior product capabilities and pricing power are reflected in its best-in-class gross margin of 74.8%
Strong free cash flow margin of 42.4% enables it to reinvest or return capital consistently
Broadcom is trading at $245.52 per share, or 39.6x forward price-to-earnings. Is now the right time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
The elections are now behind us. With rates dropping and inflation cooling, many analysts expect a breakout market to cap off the year - and we’re zeroing in on the stocks that could benefit immensely.
Take advantage of the rebound by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Meta (+222% between September 2019 and September 2024) as well as under-the-radar businesses like Sterling Construction (+1,003% five-year return). Find your next big winner with StockStory today for free.