The semiconductor industry has tremendous potential for growth due to technological advances and increasing demand for chip-based devices. Most of our daily lives revolve around these devices, and semiconductors have truly become an integral part of our lives.
Against this backdrop, investors are looking at stocks such as Taiwan Semiconductor Manufacturing Co., Ltd. (TSM), KLA Corporation (KLAC), and Qualcomm Incorporated (QCOM), which are well-positioned to capitalize on the opportunities of the digital age. It could potentially scoop up shares in fundamentally stable semiconductor stocks. .
The semiconductor industry is rapidly expanding due to groundbreaking technological advances across a variety of fields. Innovations such as artificial intelligence (AI), machine learning (ML), cloud computing, 5G networks, autonomous vehicles, and big data analytics that rely heavily on semiconductor components are driving industry growth.
The Semiconductor Industry Association (SIA) reported that global semiconductor sales reached $166 billion in the third quarter of 2024, an increase of 23.2% compared to the second quarter of 2023. September sales set the highest monthly total in market history. % jump year-on-year in the Americas.
The industry is poised to continue growing due to a surge in global technology shipments. According to Counterpoint, global smartphone shipments are expected to increase by 5% year-on-year in 2024, reaching an all-time high of 1.23 billion units. At the same time, Gartner, Inc. (IT) reports that global PC shipments will reach 62.9 million units in the third quarter of 2024.
These positive trends are also reflected in the industry’s long-term forecasts. According to Fortune Business Highlights, the global semiconductor market is expected to reach $2.6 trillion by 2032, growing at a CAGR of 14.9%.
So let’s take a closer look at the fundamentals of three semiconductor and wireless chip stocks, starting with #3.
Stock #3: Taiwan Semiconductor Manufacturing Co., Ltd. (TSM)
Headquartered in Hsinchu City, Taiwan, TSM manufactures, packages, tests and sells integrated circuits and other semiconductor devices. The company offers a variety of wafer manufacturing processes, as well as customer and engineering support services, research, design, and technology startup investments.
On November 13, TSM announced the opening of a zero waste manufacturing center in Taichung and the signing of a memorandum of understanding on carbon capture with the Ministry of the Environment.
Such initiatives strengthen TSM’s sustainability efforts, reduce operating costs, attract environmentally conscious investors, and position the company for long-term financial growth and global market leadership. There is a possibility.
On October 3, TSM announced a memorandum of understanding to collaborate with Amkor Technology, Inc. (AMKR) to bring advanced packaging and testing capabilities to Arizona.
This partnership strengthens TSM’s U.S. operations, strengthens its supply chain, strengthens its market position, and fosters growth and financial resilience.
TSM’s net revenue for the fiscal third quarter ended September 30, 2024 was $23.5 billion, an increase of 39% compared to the same period last year. Operating revenue increased 58.2% year-on-year to $11.16 billion. Furthermore, the company’s net income and EPS increased by 54.2% and 54.1% year-on-year to $10.06 billion, or $0.39.
Analysts expect TSM’s sales and EPS for the fourth quarter of the fiscal year ending December 2024 to be $26.2 billion and $2.20, respectively, up 32.3% and 52.8% year over year. Additionally, the company has surpassed consensus revenue and EPS estimates in each of the trailing four quarters, which is great.
TSM stock has increased 14.9% over the past six months and 87.9% over the past year, closing at $183.84.
TSM’s POWR Rating reflects its fundamentals. TSM earns an A grade for sentiment and quality. POWR ratings are calculated by considering 118 different factors, each weighted to the best degree.
Ranked #6 out of 90 stocks in the Semiconductor & Wireless Chips industry. In addition to the POWR Rating highlighted above, you can find TSM’s Stability, Value, Momentum and Growth ratings here.
Stock #2: KLA Corporation (KLAC)
KLAC designs, manufactures, and markets process control, process enablement, and yield management solutions for the semiconductor and related electronics industries. The company has three business segments. Specialty semiconductor processes; PCB and component inspection.
On October 15, KLAC announced process control and process-enabled solutions for integrated circuit substrate (ICS) manufacturing. This will enable KLAC to help customers achieve breakthrough chip packaging interconnect densities for high-performance applications and increase the company’s market presence in the semiconductor industry.
On October 3, KLAC announced the completion of the first phase of its state-of-the-art manufacturing facility in Singapore. This expansion will help the company gain a dominant market position in the region’s semiconductor market and enhance the company’s growth potential.
KLAC’s total revenue for the first quarter of fiscal 2025, ending September 30, 2024, was $2.84 billion, an increase of 18.5% year over year. The Company’s non-GAAP net income and non-GAAP net income per share increased 25.6% and 27.7%, respectively, from the prior year period to $988.15 and $7.33.
Furthermore, as of September 30, 2024, KLAC’s total current assets were $10.23 billion, and as of June 30, 2024, they were $10.03 billion.
For the second quarter of fiscal 2025 (ending December 2024), Street expects KLAC’s revenue and EPS to increase 18.8% and 26.4% year over year to $2.95 billion and $7.78, respectively. . Additionally, the company beat consensus revenue and EPS estimates in each of the trailing four quarters.
KLAC stock has increased 13.7% over the past year, closing at $631.47.
KLAC’s solid fundamentals are reflected in its POWR rating. The stock has an overall rating of “B”, which equates to a “buy” according to our proprietary rating system.
KLAC has an A grade for quality and a B grade for growth and sentiment. Ranked #3 out of 90 stocks in the Semiconductor and Wireless Chip industry.
Click here to access our assessment of KLAC’s Value, Momentum and Stability.
Stock #1: Qualcomm Incorporated (QCOM)
QCOM develops and commercializes foundational technologies for the wireless industry, including 3G, 4G, 5G, and high-performance on-device artificial intelligence. The company’s three business segments include: Qualcomm CDMA Technologies (QCT). Qualcomm Technology License (QTL); Qualcomm Strategic Initiative (QSI).
On October 24, QCOM announced a partnership with Mistral AI to bring Mistral’s generative AI models, Ministral 3B and Ministral 8B, to devices powered by Snapdragon processors.
This will enable QCOM to enhance its on-device AI capabilities, drive innovation, and strengthen market competitiveness to support growth in the AI-driven technology space.
On October 23, QCOM announced a multi-year technology partnership with Google to drive digital transformation in the automotive sector. This partnership will accelerate innovation, develop cutting-edge Gen AI-enabled solutions, and strengthen QCOM’s leadership in the AI-driven automotive market.
QCOM’s total revenue for the fourth quarter of fiscal 2024, which ended Sept. 29, increased 18.7% year-over-year to $10.24 billion. Non-GAAP operating income increased 31.4% year over year to $3.51 billion.
Additionally, QCOM’s non-GAAP net income and non-GAAP EPS increased 33.3% and 33.2% year over year to $3.04 billion and $2.69, respectively.
Consensus estimates for revenue and EPS for the first quarter of fiscal 2025, ending December 2024, are $10.96 billion and $2.95, up 10.5% and 7.4% year-over-year, respectively. Additionally, the company has surpassed consensus revenue and EPS estimates in each of the trailing four quarters, which is noteworthy.
QCOM stock has increased 22.8% over the past year, closing at $156.93.
QCOM’s positive outlook is reflected in its POWR Rating. The stock has an overall rating of “B”, which equates to a “buy” according to our proprietary rating system.
QCOM has an A grade for quality and a B for value. It became the top company in the semiconductor and wireless chip industry, which has 90 stocks.
Click here to access QCOM’s momentum, stability, growth and sentiment ratings.
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TSM stock fell $1.91 (-1.04%) in pre-market trading on Wednesday. Year-to-date, TSM is up 78.30%, compared to the benchmark S&P 500 index’s gain of 27.56% over the same period.
About the author: Aanchal Sugandh
Aanchal’s passion for financial markets drives his work as an investment analyst and journalist. She has a bachelor’s degree in finance and is pursuing a CFA program. She is adept at using fundamental analysis skills to assess the long-term prospects of stocks. Her goal is to help investors build portfolios that deliver sustainable returns. more…