Are These of the Top 3 Chip Stocks to Own?

The semiconductor industry is well-positioned for steady growth with increasing applications of chips across various sectors. The swift integration of advanced technologies and AI has accelerated the growth prospects of several semiconductor companies.

For reasons discussed throughout this article, I think buying fundamentally strong semiconductor stock Broadcom Inc. (AVGO – Get Rating) could be wise. However, Intel Corporation (INTC – Get Rating) and Tokyo Electron Limited (TOELY – Get Rating) are worth watching until they offer attractive entry opportunities.

Before diving deeper into the fundamentals of these stocks, let’s discuss what’s shaping the chip industry’s prospects.

The semiconductor industry is growing significantly, thanks to government incentives and widespread chip integration in electronics, automotive, and emerging technologies such as AI and the Internet of Things (IoT). Precedence Research forecasts that the global semiconductor market will reach $1.88 trillion by 2032, growing at a CAGR of 12.3%.

Gartner forecasts that AI chip revenue will hit $53.4 billion this year, registering a 20.9% improvement from last year. The surge can be attributed to the growing demand for high-performance GPUs and optimized semiconductor devices for generative AI platforms.

The worldwide semiconductor sales in the third quarter reached $134.70 billion, marking a 6.3% increase over the second quarter of 2023. The global semiconductor sales increased by 3.9% sequentially in October to $46.60 billion. Although global semiconductor sales are projected to decrease 9.4% in 2023, it is expected to increase 13.1% in 2024.

SIA’s President and CEO, John Neuffer, affirmed, “Moving forward, we forecast year-end sales for 2023 will be down compared to 2022, but the global semiconductor market is projected to rebound strongly next year with double-digit growth projected for 2024.”

On top of it, the semiconductor industry is experiencing huge demand and receiving support from government initiatives like the CHIPS and Science Act. This act allocates around $53 billion to enhance semiconductor manufacturing, research, and workforce development in the United States.

Considering these conducive trends, let’s look at the fundamentals of the three Semiconductor & Wireless Chip stocks, beginning with…

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