Silicon Savvy: 3 Semiconductor Stocks to Energize Your Portfolio

Stocks to buy

The U.S. economy’s positive future is closely tied with semiconductor’s growing significance. These tiny chips power everything from cars to healthcare, and are set to drive economic and social growth. With the semiconductor market expected to reach $1 trillion by 2030, countries are attempting to gain control over the global supply chain. This shift fosters economic strength and positions nations as magnets for investment and creators of high-tech jobs, paving the way for a promising and interconnected future. These semiconductor stocks are leading the industry and you will profit from them greatly.

Nvidia (NVDA)

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Nvidia (NASDAQ:NVDA) develops graphics processing units (GPUs), application programming interfaces and system-on-chip units. Yahoo! Finance analysts anticipate NVDA trading at an average price of $844.

Nvidia’s financials underscore its exceptional performance in Q4 and fiscal 2024. The company achieved a record quarterly revenue of $22.1 billion, marking a 22% increase from Q3. It also saw an impressive 260% surge over the last year. Notably, data center revenue reached a record $18.4 billion, reflecting a 27% rise from Q3. Improved gross margin at 76.0% in Q4 highlights NVDA ‘s profitability, solidifying its financial strength and growth prospects.

Nvidia’s partnership with tech giant Cisco (NASDAQ:CSCO) is also significantly boosting its stock. The collaboration will deploy and manage secure AI infrastructure, as well as offer cloud-based and on-premises solutions. This joint effort leverages Cisco’s expertise in Ethernet networking and NVDA ‘s GPU technology, ensuring scalable, automated AI cluster management. Cisco’s extensive global channel further enhances the accessibility of purpose-built Ethernet networking solutions. Consequently, it has attracted key clients like ClusterPower in Europe. This partnership is propelling NVDA ‘s position as a pivotal player in the evolving tech landscape.

With a strong supply chain and strategic partnerships, NVDA is poised for substantial profitability in the years ahead.

Camtek (CAMT)

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Camtek (NASDAQ:CAMT) develops and manufactures inspection and metrology equipment for the semiconductor industry. Over the past year, its stock has posted impressive gains, climbing 195.58%. Analysts are still bullish and predict that the stock will reach $92.00, almost 16% higher than its current price. 

In Q4 2023, Camtek reported robust results. It achieved $88.7 million in revenue, an 8% increase YOY. The company also forecasted $93 million to $95 million in revenue for Q1 2024, more than a 30% increase compared to Q1 2023. The record revenues are largely attributed to Camtek’s strong position with customers who manufacture HBM devices. Its increase of large orders has also added to Camtek’s already strong backlog. Camtek has also done well protecting its balance sheet. It ended Q4 2023 with $449 million in cash and investments and just $196 million in long-term debt. 

Recently, Camtek closed its acquisition of FRT Metrology. The acquisition of FRT, a leading supplier of high-precision metrology solutions for the advanced packaging and silicon carbide markets, will provide Camtek’s customers with more comprehensive metrology systems. In 2024, FRT is expected to contribute over $30 million in revenue, a decent return on the $100 million that Camtek paid for the business. 

Applied Materials (AMAT)

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Applied Materials (NASDAQ:AMAT) provides services, equipment and software to the semiconductor industry. AMAT is up 36.25% YTD, with a 12-month median price target of $221.00, representing a 9.61% increase from its current price of $201.62.

Valued at $573.44 billion in 2022, the semiconductor market is expected to reach $1,380.79 billion by 2029, exhibiting a CAGR of 12.2%. This growth is largely driven by the popularity of AI and increasing demand for consumer electronics. 

In Q1 2024, Applied Materials crushed analyst estimates. The company reported $6.7 billion in sales and EPS of $2.13, sailing past forecasts for EPS of $1.91 on sales of $6.5 billion. Applied Materials also significantly increased profitability. Gross profit margins rose 110 basis points YOY to 47.9%, translating into a 19% YOY profit increase. Attributed to significant improvements in the company’s services segment, this growth indicates substantial operational efficiency. 

Furthermore, Applied Materials is constantly expanding and strengthening its portfolio. Recently, the company boosted its patterning solutions by launching the Sym3 Y Magnum etch system and the Producer XP Pioneer CVD (chemical vapor deposition) patterning film. It also announced the acquisition of Aselta Nanographics, a move that is expected to bolster the company’s offerings and enhance existing products. These additions are crucial to increase Applied Material’s technological capacity and consolidate its market presence through strategic growth. 

On the date of publication, Michael Que 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.

The researchers contributing to this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.

Michael Que is a financial writer with extensive experience in the technology industry, with his work featured on Seeking Alpha, Benzinga and MSN Money. He is the owner of Que Capital, a research firm that combines fundamental analysis with ESG factors to pick the best sustainable long-term investments.

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