3 Semiconductor Sleepers to Buy for Massive Upside Return

It’s understandable why most of investor attention in the chips space right now goes to Nvidia (NASDAQ:NVDA). The company continues to blow out earnings expectations and is the king of this space — no doubt.

The thing is, there are plenty of other AI stocks to consider investing in right now. This is a sector as vast and diversified as one can invest in.

That’s why I’m going to focus on three companies that stand a chance of carving out their own unique growth areas of the market right now. Here are three semiconductor stocks to buy that I think deserve more attention in this AI-driven market right now.

ASML Holdings (ASML)
Founded over 40 years ago, Netherlands–based ASML Holdings (NASDAQ:ASML) aims to revolutionize and advance semiconductor tool systems.

The company is large in the metrology, inspection systems and lithography sectors. ASML stock surged 40% in the past year, surpassing the S&P 500 Index’s gains. Despite a dip in post-Q1 earnings, it rose 26% year-to-date, outpacing the SPX.

The Dutch semiconductor equipment leader revealed its dividend increase plans in late April. ASML’s board declared a final dividend of €1.75 per ordinary share, resulting in an annualized dividend of €6.10 and about a 0.60% yield. With a prudent 32.5% payout ratio, ASML retains room for growth and potential dividend boosts.

Moreover, the company also revealed its share buyback program, targeted to repurchase its shares until late 2025.

Qualcomm (QCOM)
Qualcomm (NASDAQ:QCOM), a reasonably valued chipmaker with a 28.02 P/E ratio boasts a 1.69% yield and 22 consecutive years of dividend hikes. Over the past decade, it has maintained a 7.3% annual dividend growth rate.

On Wednesday, Qualcomm unveiled its latest innovation, the Snapdragon X Plus laptop processor, integrating AI capabilities to enhance competition in the market. With over 37% assurance in faster CPU performance and 54% less power consumption, the chip will work well on any QCOM’s Snapdragon X series. That also includes the AI-powered Snapdragon X Elite.

The Snapdragon chip was recently commended for its AI enhancements for both video and photo capabilities. The advancements put the company in a great light amid growing demand for AI chips.

Taiwan Semiconductor (TSM)
With a 54% year-to-date, Taiwan Semiconductor (NYSE:TSM) remains a chip yet undervalued favorite. The company is also in demand for its advanced tech in 3mm and 5mm chips. As AI-capable phones, like the anticipated iPhone 16, drive sales, TSM’s potential in the semiconductor market shouldn’t be underestimated.

At the 2024 North America Technology Symposium on April 24, TSMC unveiled its latest semiconductor advancements, including the A16™ technology with nanosheet transistors for enhanced logic density and performance by 2026. Additionally, the company introduced System-on-Wafer (TSMC-SoW™) technology to meet AI demands in hyperscaler data centers.

The company also serves as a cornerstone in the semiconductor sector, supplying many companies directly. Despite concerns about the “China threat” and onshoring, its robust financials and $40 billion investment in U.S. chip manufacturing suggest resilience.

With strong revenue growth, solid margins and high demand for advanced nodes, TSM remains a top pick for semiconductor exposure.

— Chris MacDonald

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Source: Investor Place