The Zacks Analyst Blog Highlights NVIDIA, Taiwan Semiconductor, Micron, Advanced Micro Devices and ASE Technology
For Immediate Release
Chicago, IL – January 22, 2024 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: NVIDIA Corp. NVDA, Taiwan Semiconductor Manufacturing Co. Ltd. TSM, Micron Technology Inc. MU, Advanced Micro Devices Inc. AMD and ASE Technology Holding Co. Ltd. ASX.
Here are highlights from Friday’s Analyst Blog:
5 Semiconductor Stocks to Buy for Sparkling Returns in 2024
The broader semiconductor industry is continuing its dream run in early 2024 after an astonishing 2023. On Jan 18, the Philadelphia Semiconductor Index (SOX) closed at 4,206.52, soaring 50% over the past year and up 2.6% year to date. The ongoing momentum is likely to continue on the back of several positive catalysts.
Strong Global Demand
The explosion of artificial intelligence (AI) in both production processes and final products has created tremendous opportunities for chipset manufacturers. The data-centric computing architecture, especially cloud computing, the Internet of Things (IoT) and the metaverse, has expanded the horizon for semiconductors.
The pandemic-led social transformation has established digitization as the new normal. The outbreak of coronavirus quickly changed the lifestyle and outlook of people. The latest advent seen in the digitization space is that of the metaverse.
In a nutshell, metaverse means a virtual world that is interactive and collaborative. The digital space is powered using virtual and augmented reality. Therefore, high-tech semiconductors are an essential part of metaverse. The demand for chipsets will remain strong due to the complexity of new leading-edge technologies.
Explosion of Generative AI
The tech rally in 2023 was led by a massive thrust toward AI, especially generative AI. Some financial and technology experts believe that AI is much-hyped and may lead to a bubble. We believe that the AI-space is yet to unfold in the United States and in international markets. Once that happens, it will generate huge business opportunities for technology companies for producing high-end products.
Moreover, the robust fundamentals of the U.S. economy reduce concerns of a near-term recession. Additionally, the blockbuster earnings results of the last reported quarter of NVIDIA — the largest global manufacturer of generative AI chipsets — raised expectations of investors that the market for AI will show strong growth in the coming decade.
Taiwanese chipmaker Taiwan Semiconductor Manufacturing Co Ltd. — the world's largest contract chipmaker — recently projected more than 20% revenue growth in 2024 on booming demand for high-end chips used in AI applications even as the broader industry faces weak smartphone and electric vehicle sales.
Smart Devices Aiding Computing Demand
Smart devices need computing and learning capabilities to perform face detection, image recognition and video analytics capabilities. These require high processing power, speed and memory, low power consumption, and better graphic processors and solutions, which bode well for the semiconductor industry.
The World Semiconductor Trade Statistics (“WSTS”) projects robust growth in 2024, with an estimated surge of 13.1% annually. As estimated by WSTS, s global semiconductor sales should reach $588.4 billion in 2024. Technology research and advisory firm IDC predicts 20.2% year-over-year growth in semiconductor sales in 2024, driven by demand from AI server and end-point device manufacturers.
Our Top Picks
We have narrowed our search to five giant semiconductor companies with strong growth potential in 2024.These stocks have seen positive earnings revisions in the last 60 days. Each of Our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
NVIDIA Corp. is gaining from the strong growth of artificial intelligence, high-performance computing and accelerated computing, which is boosting its Compute & Networking revenues. The datacenter end-market business is likely to benefit from the growing demand for generative AI and large language models using GPUs based on NVIDIA Hopper and Ampere architectures.
A surge in Hyperscale demand and a solid uptake of AI-based smart cockpit infotainment solutions are acting as tailwinds for NVDA. The collaboration with Mercedes-Benz and Audi is likely to advance NVDA’s presence in the autonomous vehicles and other automotive electronics space.
Zacks Rank #1 NVIDIA has an expected revenue and earnings growth rate of 53.7% and 63.1%, respectively, for the current year (ending January 2025). The Zacks Consensus Estimate for current-year earnings has improved 1.1% over the last 30 days.
Taiwan Semiconductor Manufacturing Co. Ltd. manufactures, packages, tests, and sells integrated circuits and other semiconductor devices in Taiwan, China, Europe, the Middle East, Africa, Japan, the United States and internationally. .
TSM provides complementary metal oxide silicon wafer fabrication processes to manufacture logic, mixed-signal, radio frequency, and embedded memory semiconductors. TSM also offers customer support and engineering services, as well as manufactures masks. Its products are used in high-performance computing, smartphone, IoT, automotive, and digital consumer electronics.
Zacks Rank #1 Taiwan Semiconductor has an expected revenue and earnings growth rate of 21.1% and 19.9%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 4.3% over the last seven days.
Micron Technology Inc. has been benefiting from an improving supply-demand environment and signals that the industrywide sluggish period is nearing its end. The expectation of supply normalization by mid-year 2024 is likely to drive pricing, while the boom in AI spending is expected to fuel demand for MU’s chips used in the data center end market.
A rising mix of high-value solutions and improving customer engagement and cost structure are growth drivers for MU. Moreover, 5G adoption in the IoT devices and wireless infrastructure is likely to spur demand for memory and storage.
Zacks Rank #2 Micron Technology has an expected revenue and earnings growth rate of 43.4% and 90.1%, respectively, for the current year (ending August 2024). The Zacks Consensus Estimate for current-year earnings has improved 60.4% over the last 30 days.
Advanced Micro Devices Inc. is benefiting from portfolio strength and an expanding partner base. Strong demand for EPYC processors has been a growth driver for AMD. The launch of the Ryzen 8040 series processor with Ryzen AI and Instinct MI300 Series data center AI accelerators bodes well for top-line growth.
AMD continues to benefit from acquisitions, including Xilinx and Pensando, which has diversified its business. For fourth-quarter 2023, AMD expects year-over-year growth in the Data Center and Client segments by a double-digit percentage. Sequentially, the Data Center segment’s revenues are expected to grow on a double-digit percentage, while Client are also expected to increase.
Zacks Rank #2 Advanced Micro Devices has an expected revenue and earnings growth rate of 13.8% and 37.4%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 2.8% over the last 30 days.
ASE Technology Holding Co. Ltd. is a provider of semiconductor manufacturing services in assembly and testing. ASX develops and offers complete turnkey solutions covering front-end engineering testing, wafer probing and final testing as well as IC packaging, materials and electronic manufacturing services. ASX operates primarily in Taiwan, China, South Korea, Japan, Singapore, Malaysia, Mexico, United States and Europe.
Zacks Rank #2 ASE Technology Holding has an expected earnings growth rate of 58.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 5.8% over the last 30 days.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Advanced Micro Devices, Inc. (AMD) : Free Stock Analysis Report
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