5 Semiconductor Stocks to Watch

Despite the weak economy and sluggish overall demand that chipmakers faced in 2023, the past 12 months saw plenty of developments in the semiconductor space, among them a spike in demand for chips that support artificial intelligence (AI). Here is a collection of stocks to watch as the sector recovers in 2024.

• Nvidia is to unveil its latest AI innovations on 8 January at the CES technology trade show in Las Vegas.
• AMD believes the AI data centre chip market is worth $45bn, up from its previous forecast in June of $30bn.
• ASML shipped its first High-NA EUV lithography scanner to Intel in December.

Nvidia

The AI Powerhouse Stock

Nvidia [NVDA] became something of a household name in 2023 thanks to the explosive growth of generative AI — the firm’s share price rocketed 239% over the course of the year, in May becoming the seventh US company to reach a $1trn valuation. The chipmaker isn’t slowing down, either. It has announced it’ll unveil its latest AI innovations on 8 January at the annual CES technology trade show in Las Vegas.

AMD

The Faster AI Training Stock

Advanced Micro Devices [AMD] said in December that the market for AI data centre chips is worth approximately $45bn, up from a $30bn valuation in June, according to a Reuters report. “We believe AI is the single most transformational technology over the last 50 years and we are uniquely positioned to power the end-to-end infrastructure that will define the AI era,” declared the chipmaker in a post on X following the report. The same day, the company unveiled the Instinct MI300X accelerator, designed to help speed up AI training. The AMD share price rallied 127.6% over the course of 2023.

ASML

The Lithography Scanner Stock

ASML [ASML] has ended the year on a high, shipping its first High-NA EUV lithography scanner to Intel [INTC]. “A few suppliers had some difficulties in actually ramping up and also giving us the right level of technological quality, so that led to some delay,” ASML CEO Peter Wennink had told Reuters back in September. The scanners, which will cost approximately $300m per unit, are designed to help chipmakers produce smaller and faster semiconductors. The ASML share price rose 39.9% over the course of 2023.

TSMC

The New Chairman Stock

Taiwan Semiconductor Manufacturing Company (TSMC) [TSM] Chairman Mark Liu announced he will step down in June, with current vice chairman CC Wei tapped to step up as his replacement. According to Chinese tech blog Gizmochina, Tesla [TSLA] is set to adopt TSMC’s 3nm chips for its Full Self-Driving software in 2024. A post on WeChat in November indicated that Intel will spend $14bn on TSMC’s 3nm chips for its Lunar Lake processors over the next two years. The Taiwanese giant’s 2nm chips are expected to enter production by 2025. The TSMC share price gained 42.3% over the course of 2023.

Micron

The Chinese Relations Stock

Micron Technology [MU] announced in its most recent quarterly report that it had settled an intellectual property dispute with Fujian Jinhua Integrated Circuit. According to Bloomberg, this outcome could be a sign that Micron is keen to mend relations with Beijing, which had banned its memory chips from being used in key infrastructure projects due to security concerns back in May. The Micron share price jumped 8.6% following the release of the quarterly report on 21 December and gained 71.9% over the course of 2023.

Another Way to Invest in Semiconductors

The VanEck Semiconductor ETF

The VanEck Semiconductor ETF [SMH] currently has all five stocks in its top 10 holdings. The fund is a pure play on the semiconductor theme, offering exposure to companies that earn at least half of their revenue from semiconductors or related activities. The fund gained 73.4% over the course of 2023.

The Invesco Semiconductors ETF [PSI] holds AMD, Nvidia, Intel and Micron. As of 30 September, semiconductors account for 46.9% of the portfolio and semiconductor equipment has been allocated 45.3%. Electronic manufacturing services, electronics components and electronic equipment and instruments all have single-digit weightings. The fund gained 49.5% over the course of 2023.