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Semiconductor stocks have been on fire since the start of 2023, primarily due to the artificial intelligence (AI) megatrend. However, the demand for chips across devices such as smartphones, laptops, tablets, and much more has helped the VanEck Semiconductor ETF (SMH) to surge roughly 1,000% in the past 10 years - easily outpacing broader equity indices, such as the S&P 500 Index ($SPX) and Nasdaq Composite ($NASX).
While market bellwether Nvidia (NVDA) continues to dominate the headlines, the AI megatrend has just begun and should benefit other chip stocks in the upcoming decade. As leaders in the industry pull back ahead of the start of Q2 earnings, pressured by trade concerns with China and a broader rotation into small-caps, now could be an opportune time to scoop up shares of analysts' favorite semiconductor stocks.
For investors looking to take advantage of the dip and add some exposure to this critical industry, here are three top-rated semiconductor stocks with more room to run, according to analysts.
#1. Advanced Micro Devices Stock
Valued at $257 billion by market cap, Advanced Micro Devices (AMD) has already returned close to 4,000% to shareholders in the past decade. Amid this week's selling in semi stocks, AMD is now off about 30% from its March highs.
Nvidia currently leads the AI chip market, but AMD grew its data center sales by 80% year over year in Q1 of 2024, as the business accounted for 40% of total revenue. Alternatively, weakness in other verticals meant its Q1 sales rose by just 2% year over year to $5.5 billion. Comparatively, AMD's net income stood at $123 million, compared to a loss of $139 million in the year-ago period.
According to research firm TD Cowen (TD), AMD’s MI300X accelerator program should help the chip maker generate $4.75 billion in sales in 2024, and $9.5 billion in 2025.
Out of the 35 analysts covering AMD stock, 28 recommend “strong buy,” one recommends “moderate buy,” and six recommend “hold.”
The average target price for AMD stock is $197.78, about 27% above the current trading price.
#2. Broadcom Stock
Valued at $726 billion by market cap, Broadcom (AVGO) may be the next company to enter the trillion-dollar club. AVGO stock has surged 2,360% since July 2014, after adjusting for dividend reinvestments, and is poised to benefit from strong hardware demand that supports AI applications.
Similar to Nvidia, Broadcom just completed a 10-for-1 stock split, making the shares - and AVGO stock options - much more accessible to retail traders. Up about 40% YTD, the stock has pulled back roughly 15% from its highs of a month ago.
TD Cowen explains that the transition to Ethernet back-end networking and custom silicon ramping should act as a tailwind for Broadcom going forward. While its sales in the recent quarter rose by 34% year over year, its free cash flow stood at $4.7 billion, indicating a margin of almost 40%. Moreover, the chip giant raised its full-year sales forecast due to strong demand for AI products.
Out of the 32 analysts covering AVGO stock, 29 recommend “strong buy,” and three recommend “hold.”
The average target price for AVGO stock is $188.84, indicating expected upside of 20.5% from here.
#3. Marvell Technology Stock
The final stock on my list is Marvell Technology (MRVL), which, according to TD, should benefit from high attachment rates for optoelectronics and its custom silicon business. Marvell manufactures products used in gaming consoles, AI servers, and enterprise workstations.
Similar to Nvidia, Marvell's largest business is the data center segment, which accounted for 40% of sales last year. While its sales in fiscal Q1 of 2025 fell by 12% year over year to $1.16 billion, data center sales almost doubled to $876 million.
Looking ahead, management expects AI-related sales to touch $1.5 billion in fiscal 2025 and $2.5 billion in 2026, as the addressable market for data infrastructure is expected to triple to $75 billion through 2028.
Out of the 29 analysts covering MRVL stock, 26 recommend “strong buy,” two recommend “moderate buy,” and one recommends “hold.”
The average target price for MRVL stock is $89.11, a premium of 33.2% to the current prices.
On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
