Innovation in the chip industry continues to advance, driven by growing consumer demand due to application growth and technological advances. Also, the adoption of AI-driven devices and changing consumer preferences will increase demand and open more opportunities for the semiconductor market in the future.
Given the industry’s promising outlook, investors are looking to buy blue-chip semiconductor stocks such as Taiwan Semiconductor Manufacturing Co., Ltd. (TSM), Qorvo, Inc. (QRVO), and QUALCOMM Incorporated (QCOM) for long-term gains. may consider purchasing.
Despite surging demand for AI-powered graphics processing equipment and high demand for AI-enabled devices, as well as the prospect of semiconductor shortages due to continued geopolitical tensions and other supply risks, The semiconductor market looks promising.
The Semiconductor Industry Association (SIA) reported global semiconductor sales of $53.1 billion in August 2024. This reflects a 20.6% increase compared to the same period in 2023 and a 3.5% increase from the July 2024 total of $51.3 billion. On a regional level, sales also showed strong year-over-year growth, with sales in the Americas increasing 43.9%, followed by China with 19.2% and Asia Pacific/All Other with 17.1%.
Additionally, SIA reported that the industry’s global sales in 2023 were $527 billion, with approximately 1 trillion semiconductors sold worldwide. CHIPS and the Science Act have expanded semiconductor manufacturing capacity in the United States, and rising demand is spurring investment in new industries to increase chip production.
The global semiconductor market is expected to grow from $681.05 billion in 2024 to $2.6 trillion by 2032, expanding at a remarkable CAGR of 14.9%. Additionally, the U.S. semiconductor market is expected to grow rapidly and reach $258.3 billion in 2032 due to increased usage of consumer electronics and integrated circuit integrated products.
With these favorable trends in mind, let’s take a look at the fundamentals of the three best semiconductor and wireless chip stocks, starting with our third choice.
Stock #3: Taiwan Semiconductor Manufacturing Co., Ltd. (TSM)
Headquartered in Hsinchu City, Taiwan, TSM manufactures, packages, tests and internationally sells integrated circuits and other semiconductor devices. The company offers wafer fabrication processes, including processes for manufacturing complementary metal-oxide-semiconductor (CMOS) logic, mixed-signal, radio frequency, embedded memory, bipolar CMOS mixed-signal, and more.
On October 3, TSM and Amkor Technology, Inc. (AMKR) signed a memorandum of understanding to collaborate to further expand Arizona’s semiconductor ecosystem and bring advanced packaging and test capabilities to Arizona. Under the agreement, TSMC will support its customers with turnkey advanced packaging and testing services contracted by Amkor.
The strategic alignment and proximity of TSMC’s front-end factory and Amkor’s back-end facility reduces overall product cycle time.
TSM’s net sales for the third quarter ended September 30, 2024 were NT$759.69 billion ($23.62 billion), an increase of 38.9% year-on-year. Gross profit increased 48.1% year-on-year to NT$439.34 billion ($13.66 billion). The company’s operating revenue was NT$360.77 billion ($11.22 billion), an increase of 58.2% year-on-year.
Additionally, TSM’s net income and EPS totaled NT$325.26 billion ($10.11 billion) and NT$12.54, representing year-on-year growth of 54.2%, respectively.
Analysts expect TSM’s fourth quarter EPS (ending December 2024) to be $2.16, up 50% year over year. The company’s revenue for the quarter is expected to be $25.89 billion, an increase of 30.7% year over year. What’s more, the company has surpassed consensus revenue and EPS estimates in each of the trailing four quarters, which is great.
TSM stock has increased 48.1% over the past six months and 126.2% over the past year, closing at $205.84.
TSM’s POWR rating reflects TSM’s solid outlook. The stock has an overall rating of B, which equates to a Buy according to our proprietary rating system. POWR ratings are calculated by considering 118 different factors, each weighted to the best degree.
The stock earns an A grade for Sentiment and Quality. Ranked #10 out of 91 stocks in the Semiconductor & Wireless Chips industry.
Click here to access additional TSM ratings on Stability, Momentum, Value, and Growth.
Stock 2: Quorvo Co., Ltd. (QRVO)
QRVO is committed to developing and commercializing technologies and products for wireless, wireline and power markets around the world. It works in three segments. High Performance Analog (HPA). Connectivity and Sensors Group (CSG); and Advanced Cellular Group (ACG).
In terms of forward EV/Sales, QRVO is trading at 2.73x, which is 8.4% lower than the industry average of 2.98x. Additionally, the company’s forward price to sales multiple of 2.51 is 15.8% lower than the industry average of 2.98. Similarly, the company’s forward price/cash flow ratio of 12.98x is 42.2% lower than the industry average of 22.44x.
QRVO’s total revenue for the first quarter ended June 29, 2024 was $886.67 million, an increase of 36.2% year-on-year, of which ACG revenue was $642.3 million, an increase of 55.8% year-on-year. I did. Non-GAAP gross profit increased 29.8% year over year to $362.66 million. Additionally, non-GAAP operating income was $98.12, an increase of 110% from the prior year period.
Additionally, the company’s non-GAAP net income increased by 148.7% and 155.9% year over year to $83.52 million, or $0.87 per share.
Analysts expect QRVO’s fourth-quarter EPS (ending March 2025) to be $1.49, an increase of 7.3% year-on-year, and sales for the same period to be $967.41 million, an increase of 2.8% year-on-year. I am doing it. It also beat consensus revenue and EPS estimates in each of the trailing four quarters.
QRVO stock last closed at $104.28, up 3.4% over the past month and 12.4% over the past year.
The fundamentals of QRVO’s sound are reflected in its POWR ratings. The stock has an overall rating of “B”, which equates to a “buy” according to our proprietary rating system.
The stock has a B grade for value, quality, and growth. Within its industry, QRVO ranks #4 out of 91 stocks.
Click here to access other ratings for QRVO on Momentum, Sentiment and Stability.
Stock #1: Qualcomm Incorporated (QCOM)
QCOM is committed to developing and commercializing foundational technologies for the wireless industry worldwide. The company operates through three segments. Qualcomm CDMA Technologies (QCT). Qualcomm Technology License (QTL); Qualcomm Strategic Initiative (QSI).
On October 16, QCOM announced a quarterly cash dividend of $0.85 per common share, payable on December 19, 2024 to stockholders of record as of the close of business on December 5, 2024.
QCOM’s annual dividend is $3.40, giving it a yield of 1.99% at the current stock price. The average dividend yield over four years is 2.09%. Additionally, the company’s dividends have grown at a CAGR of 7.1% over the past three years. QCOM has increased its dividend for 20 consecutive years.
On September 25, Aramco, a subsidiary of QCOM, and the Saudi Arabian Research, Development and Innovation Authority (RDIA) announced the launch of Design in Saudi Arabia, a Saudi Arabian incubator program aimed at supporting startups adopting AI and the internet. announced plans to launch DISA). Objects of Things (IoT) and wireless technologies for industrial use cases.
QCOM’s revenue for the third quarter ended June 23, 2024 was $9.39 billion, an increase of 11.2% year over year. The company’s non-GAAP operating income of $3.02 billion reflects year-over-year growth of 19.7%. Non-GAAP net income and EPS were $2.65 billion and $2.33, an increase of 25.8% and 24.6%, respectively, from the prior year.
Street expects QCOM’s fourth quarter (ending September 2024) revenue and EPS to increase 14.6% and 27% year over year to $9.93 billion and $2.57, respectively. Additionally, the company beat consensus EPS and revenue estimates in each of the trailing four quarters.
QCOM stock last closed at $171.10, up 4.1% over the past six months and 52.5% over the past year.
QCOM’s POWR Rating reflects its positive outlook. The stock has an overall rating of “B”, which equates to a “buy” according to our proprietary rating system.
QCOM’s quality is A grade. This stock ranks #2 out of 91 stocks in the Semiconductor & Wireless Chips industry.
Click here to see additional POWR ratings for QCOM on Growth, Sentiment, Value, Stability, and Momentum.
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TSM stock fell $0.36 (-0.18%) in after-hours trading on Friday. Year-to-date, TSM is up 94.72%, compared to the benchmark S&P 500 index’s gain of 24.15% over the same period.
About the author: Rjkumari Saxena
Rajkumari started her career as a writer, but with her academic background in the commercial field, she gradually shifted her focus to financial journalism. Fascinated by the interplay of business and economic changes in equities, she hopes to evolve as an analyst. An expert at simplifying complex financial concepts, her mission is to provide investors with insights that lead to profitable decisions. more…
