Q4 Stock Predictions: 3 Semiconductor Stocks Set to Soar
When it comes to semiconductor stocks ready to soar, I could have added “that aren’t Nvidia” to the title of this article. It’s likely that Nvidia (NASDAQ:NVDA) will continue to reward shareholders in 2024. However, enough has been written about NVDA stock to allow investors to make their decision about owning it.
Instead, this article looks at three of the “other” semiconductor stocks for investors to consider in the fourth quarter and into next year. Artificial intelligence (AI) will continue to be one (but not the only) catalyst for the chip sector.
Two of the stocks in this article are staking their claims to grow market share in AI applications. The other stock is moving in a different direction, for now. But that direction may also steer this company into the AI space, which will serve as another catalyst to stock that’s already up nearly 50% in 2023.
Advanced Micro Devices (AMD)
Before AI became the hottest thing in the chip sector, Advanced Micro Devices (NASDAQ:AMD) was one of the best-performing semiconductor stocks. The company is the unquestioned leader in the GPU markets for computer and gaming enthusiasts. But since these are consumer-facing sectors, AMD stock is down nearly 34% from its all-time high.
That’s likely to change with the release of its next-gen MI300 chips. Another area that AMD dominates is the data center market. The new chips will combine CPUs and GPUs in what the company claims will be the world’s first accelerated processing unit (APU) for AI applications targeted to data centers.
Nvidia is the clear leader in the AI chip space. But this new offering will be the first of what some analysts believe will be only the beginning of AMD’s push to carve out some market share in the AI GPU market.
Amazon (AMZN)
Despite being up more than 48% in 2023, Amazon (NASDAQ:AMZN) stock is up just 3% in the last 12 months. Some of that is due to normalization in the company’s e-commerce business. But one criticism leveled against the company is how quiet it’s been regarding AI.
Those critics will have to find a new narrative. Amazon recently announced a $400 billion investment in the generative AI company, Anthropic. And that’s why Amazon makes this list of must-buy semiconductor stocks.
Anthropic will be using Amazon’s proprietary chips, Inferentia and Trainium, to create new large language models. And since Amazon is offering the Trainium chip at a 50% discount compared to other GPU chips, the partnership may benefit Amazon’s cloud division, Amazon Web Services, which has a growth rate that is lagging others in the sector.
ON Semiconductor (ON)
If you’re looking for a way to invest in semiconductor stocks that doesn’t center around AI, ON Semiconductor (NASDAQ:ON) is one to consider. The company is the industry leader in silicon carbide (SiC) chips that are used in electric vehicles and infrastructure.
Demand has turned out to be a bit of a double-edged sword as the company is struggling with its margins. Nevertheless, many of the company’s existing markets will look to expand into AI and machine learnings in the future. This should help accelerate margin growth for SiC chips.
ON stock is up 43% in 2023. However, it’s down nearly 10% in the month ending Oct. 4, 2023. That dip is giving investors a second chance to own a stock that analysts project will have 20% stock price growth to go along with 8.9% earnings growth over the next 12 months.
On the date of publication, Chris Markoch did not have (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.
