3 Top-Rated Semiconductor Stocks Wall Street Analysts Are Loving Now: January 2024

Stocks to buy

Semiconductors provide functionality and life to the digital age. Everything from our smartphones, tablets, PCs and even cars are, in some way or another, powered by these tiny silicon-based devices. While providing functionality to a multiplicity of electronic devices in the modern era, semiconductors are also critical to supercharging technological revolutions, including breakthroughs in artificial intelligence (AI), machine learning and quantum computing.

Investors betting on semiconductor stocks can be tantamount to betting on the future of technology. With all that said, below are three top-rated semiconductor stocks that Wall Street analysts are loving these days.

Nvidia (NVDA)

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Nvidia (NASDAQ:NVDA) was one of the best-performing stocks of 2023, with a staggering gain of more than 240% last year. The chip stock is already off to a great start in 2024, so much so that it could be another record year for Nvidia’s share price. Shares, thus far, have risen to an all-time high of $563.82/share. The chipmaker has been riding high on the booming demand for its AI solutions, which power some of the most advanced and popular applications in the world, such as OpenAI’s ChatGPT and other generative AI platforms.

According to Koyfin, out of 51 Wall Street analysts surveyed, the overwhelming majority of them have given Nvidia a Buy rating. The chipmaker’s average price target is also $662.72/share, which implies a nearly 18% potential increase from the current share price. Nvidia’s dominance in the AI chip market as well as its leadership in providing chips that power data centers are tailwinds that could continue guiding the company’s shares upward.

Micron Technology (MU)

Micron Technology (NASDAQ:MU) is best known for designing and selling memory products, including NAND flash memory and random-access memory such as DRAM and SRAM. Ever since ChatGPT and other generative AI tools entered the market in the first half of 2023, demand for advanced memory chips has accelerated. In its Q3 and Q4 2023 earnings reports, despite sluggish memory demand for PCs and smartphones, the firm reported seeing sizable demand for chips destined to power AI workloads.

That is probably why Wall Street analysts are largely bullish on the stock despite a lack of strong demand for consumer hardware. Micron currently holds a Strong Buy rating from many Wall Street analysts. With price targets floating around $82/share, a 16% potential upside could be at play here for investors willing to allocate at the current share price.

Advanced Micro Devices (AMD)

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The last entrant on this list is Advanced Micro Devices (NASDAQ:AMD). This chipmaker also has a Strong Buy rating from a variety of Wall Street analysts, and it’s not hard to figure out why. AMD is slated to officially enter the AI chip race in 2024. Last year, AMD announced how it would tackle the AI market. In particular, in its second-quarter earnings report, the chipmaker finally announced the MI300x GPU chipset, which will compete directly with Nvidia’s A100 and H100 chips used to train LLMs. The chipmaker announced it expects to sell $2 billion in AI chips next year.

While AMD’s entrance into the AI chip market will ultimately require a lot of time and investment, Wall Street analysts are still excited to see what the chipmaker has to bring to the table. Given the way AMD unseated Intel (NASDAQ:INTC) in the CPU market, AMD could potentially be a capable competitor to Nvidia in the burgeoning AI chip market.

On the date of publication, Tyrik Torres did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Tyrik Torres has been studying and participating in financial markets since he was in college, and he has particular passion for helping people understand complex systems. His areas of expertise are semiconductor and enterprise software equities. He has work experience in both investing (public and private markets) and investment banking.

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