Seeking the perfect investment opportunity? Well, consider venturing into the dynamic realm of semiconductor stocks. These technological powerhouses not only continue to drive progress in our modern world, but they also show no signs of deceleration. So, if you’re looking for where to invest in semiconductor stocks, you’ve come to the right place. Dipping into these stocks allows you to align with the heartbeat of the technological revolution. Below, you’ll find a curated list of three options worth considering.
Focusing on the domestic market is prudent to ensure a wise choice in semiconductor stocks. After all, international investments can be intricate and, as the legendary Warren Buffett once advised, “Never invest in a business you cannot understand.” So, let’s narrow down the options to three exceptional blue-chip chipmakers.
Starting with just $1,000, it would be wise to allocate most of your investment to the confident pick while reserving a moderate portion for the overlooked semiconductor giant. This strategic approach holds the potential for significant gains. So don’t hesitate! Immerse yourself in the thrilling world of semiconductor stocks and ride the wave of technological progress to achieve financial success.
Advanced Micro Devices (AMD)
Investing in semiconductor stocks has become a hot topic, and one company that stands out is Advanced Micro Devices (NASDAQ:AMD). Despite heavy competition, AMD, led by Chief Executive Officer (CEO) Dr. Lisa Su, has staged an impressive comeback.
AMD’s recent earnings report showcased why investors are bullish on this chipmaker. AMD has solidified its position with quarterly revenue reaching $5.6 billion, a 16% year-over-year increase and data center revenue skyrocketing by 42% to $1.7 billion. These impressive numbers back Su’s confidence in gaining market share in 2023.
AMD’s growth prospects are compelling. Despite a slowdown in PC sales, the company’s margins have remained strong, boasting a non-GAAP operating margin of 27% compared to Intel’s (NASDAQ:INTC) 12.6% in 2022. Moreover, AMD is pivoting toward data center dominance, with revenues of $5.6 billion last year, growing three times faster than its gaming unit.
AMD’s strategy for 2023 revolves around placing innovation at its very foundation. The upcoming Ryzen 7000 series processors, set to launch soon, promise improved performance. The Ryzen 7040 CPU series offers exceptional battery life, while the Ryzen AI provides dedicated on-chip AI inference capabilities. Both of these will become exceptional money-makers for the company moving forward.
AMD’s latest MI300 accelerator is specifically designed to cater to the demands of cloud data centers, focusing on empowering large-scale AI applications.
AMD appears to be an odds-on favorite for those considering semiconductor stock investments. With its relentless drive for newer, faster, and more powerful components, AMD continues to widen its competitive moat. As inflation stabilizes and the PC market potentially recovers, the company’s long-term growth prospects remain enticing.
Investing a healthy slice of your $1,000 in AMD seems smart among U.S.-based semiconductor specialists.
Intel (INTC)
Investing in semiconductor stocks, particularly in the booming AI chip market, presents a highly lucrative opportunity. Intel is rapidly emerging as a formidable competitor in this field, although Nvidia (NASDAQ:NVDA) currently holds a dominant position.
Intel’s strategic acquisition of Habana Labs in 2019 has proven to be wise as the demand for AI chips continues to soar. Although Habana’s Gaudi2 AI chip may not surpass Nvidia’s H100 GPU in raw performance, it offers an appealing value proposition. Intel aims to rival the company directly with the upcoming Gaudi3 chip.
The MLPerf benchmarks clearly demonstrate Nvidia’s H100 as the current leader, but Habana’s Gaudi2 chips hold their ground. While H100 outperforms Gaudi2 by threefold, a software update for the latter is set to narrow the gap. The performance per dollar ratio in the AI realm is crucial, and Gaudi2’s competitive pricing presents an attractive alternative to NVIDIA’s H100.
Intel has multiple avenues to capitalize on the AI boom. In addition to Habana’s chips, Intel’s Sapphire Rapids data center CPUs incorporate AI accelerators for inference tasks. Furthermore, Intel’s data center GPUs power the cutting-edge Aurora supercomputer. Intel is also aggressively pursuing advancements in its foundry business, which could potentially secure future orders for manufacturing AI chips.
While Nvidia currently dominates data center GPUs, Intel’s Gaudi chip family should not be overlooked or underestimated. Intel is well-positioned to attract new customers with its compelling value proposition in the ongoing AI revolution.
Investing in semiconductor stocks, including Intel, can be a strategic move to capitalize on the ever-growing demand for AI chips. More importantly, you get an established player with a company like Intel. Whosoever is looking for where to invest in semiconductor stocks, their research should start with Intel.
Micron Technology (MU)
Micron Technology (NASDAQ:MU), the leading memory and storage chip manufacturer, has quietly thrived amidst the semiconductor frenzy. While attention gravitates toward Nvidia and its AI-centric graphics processors, Micron’s chips power smartphones, data centers, and electric vehicles.
Despite its recent under-the-radar status, Micron stands to benefit greatly from the expanding AI industry. AI servers demand up to eight times more DRAM and three times more storage than regular servers, promising a bright future for Micron’s stock.
In the short term, Micron faces challenges in consumer segments due to the economic slowdown. Excess inventory led to price markdowns and a substantial percentage drop in revenue decline of 52% in Q2 of fiscal 2023, year over year. However, Micron has taken proactive measures by reducing costs and personnel.
Encouragingly, Micron anticipates the peak of inventory issues has passed, indicating an imminent improvement in financial results. Additionally, with its stock down by double digits from its peak, now could be an opportune time for investors to enter the market.
Determining where to invest in semiconductor stocks is a perpetual question. However, it is essential not to overlook the potential of Micron and the imminent surge in demand for AI. As a semiconductor stock, Micron presents a unique investment opportunity poised to shine in the coming years.
If you have completed the list and wish to explore potential stock picks further, there’s no need to worry. Fear not!
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On the publication date, Faizan Farooque did not hold (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.