In this article, we will take a detailed look at the 10 Best Semiconductor Stocks to Buy for the AI Boom.
More than two years have passed since the proliferation of the disruptive Artificial Intelligence (AI) megatrend, symbolically marked by the launch of OpenAI’s revolutionary product – ChatGPT. Since then, the AI revolution has accelerated rapidly, with 2023 and 2024 seeing a surge in demand for advanced AI applications across industries. This transformation has driven companies to increasingly rely on robust data centers that can support the computational power required by the intelligent algorithms.
In tandem with the rise of AI, the data center sector has experienced substantial growth. The need for larger, more efficient, and scalable data storage and processing capabilities has created a boom in infrastructure investments. Data centers, which house the powerful servers needed for AI workloads, have become critical enablers of this technology’s expansion. This increase in demand for data center capacity is a key factor that has propelled semiconductor stocks, as these centers rely heavily on cutting-edge semiconductors to deliver the speed, efficiency, and power necessary to process vast amounts of data in real time.
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We shortlisted 35 semiconductor stocks using the holdings of iShares’ Semiconductor ETF. Then we merged these stocks with Insider Monkey’s proprietary hedge fund holdings database and identified the 10 most popular hedge fund semiconductor stocks. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10. ASML Holding NV (NASDAQ:ASML)
Number of Hedge Fund Holders: 64
ASML Holding NV (NASDAQ:ASML) dominates the photolithography systems market, a critical technology for manufacturing semiconductors by projecting circuit patterns from a photomask onto silicon wafers using light. These advanced systems enable chip manufacturers to pack more transistors onto the same silicon area, a key driver of technological progress, with photolithography accounting for a significant portion of the cost of producing advanced semiconductor chips, including cutting-edge chips used in AI applications. The Dutch chip manufacturing machinery provider also ranked 9th on a recent list of AI news and ratings that Wall Street was watching.
After 3 years of explosive double-digit revenue growth, ASML Holding NV (NASDAQ:ASML) experienced a significant slowdown throughout 2024, with only 2% revenue growth projected for the full year. This, coupled with increasing geopolitical fears and intensifying US-China trade wars, has pushed the stock price down by -24% in the last 6 months. Nevertheless, during a recent investor’s day in November, management expressed confidence that secular growth opportunities with AI and significant technology improvements to drive efficiency gains for customers will help the company achieve the previously announced ambitious 2030 roadmap. The company continues to project double-digit EUV spending CAGR until 2030, driven by an anticipated $1 trillion+ semiconductor market as well as an increase in critical lithography layers.
ASML Holding NV (NASDAQ:ASML)’s management commented on its long-term outlook during the November investor presentation. Here is what they said:
“We will, of course, also reconfirm our view for 2030. So, a few weeks ago, we had a bit of, I would say, a more, I would say, conservative view for 2025. In many ways, this is related to the change of the market we’re going to talk about, this big transformation that AI is driving, but when it looks — when it comes to 2030, we are still very, very bullish. I think you have seen that this morning in the press release, and Roger give you again the fundamental that explains why we believe that 2030 is still a very, very positive year for us.
As I said before, the industry will require major innovation to address the need to improve cost and energy consumption on AI. And this will require to further boost the industry road map. Logic, DRAM will see major transformation in order to be able basically to deliver on those needs. And this will result in a product risk, which is more towards DRAM, more towards advanced logic, which is once again very beneficial for our customers and for ASML.”
9. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 68
Intel Corporation (NASDAQ:INTC) is a leading chipmaker specializing in designing and manufacturing microprocessors for global PC and data center markets, where it holds a dominant market share in CPUs. Known for pioneering x86 microprocessor architecture and advancing Moore’s Law, Intel is now expanding into new areas like communications, automotive, and IoT, while leveraging its manufacturing expertise to establish an outsourced foundry model for producing chips for other companies.
It is undoubted that INTC has experienced a difficult 2024, marked by disappointing 2H 2024 results which led to dividend suspension, a 15% cut in workforce and major restructuring plans being announced. These events have pushed the stock price down by -58% in the last year and led to the departure of the CEO Pet Gelsinger. The appointment of a new CEO has set the stage for a multi-year transformation plan for INTC. The company’s new CEO commented on his long-term approach and how it differs from the previous strategy during Barclays 22nd Annual Global Technology Conference. Here is what he said:
“Well, I think there’ll be a few differences and there’ll be a few things that don’t change. Obviously, building world-class products and a world-class foundry, we’re still highly invested in doing that. And those 2 things together will help differentiate us in the marketplace.
Dave and I enjoyed working with Pat and he left us in a better operational place. But I think Dave and I will both tell you that as the CEO of Intel Products, we’re going to invest more in products, be focused on making sure that we shore up those road maps, that we’re more competitive in a lot of the growth markets than we have been historically. And that will then fill the fabs, right? So great products mean more wafers, which means better capacity in our fabs. As well as we’re laser focused. We’ve obviously made very large investments in our fab footprint, and we need a much better ROI for the investment that we’ve made. So, we’re going to be laser focused on how do we take advantage of the investments we made, how do we bring customers into those fabs and start to see wafers fill them.”
8. Marvell Technology Inc (NASDAQ:MRVL)
Number of Hedge Fund Holders: 70
Marvell Technology Inc (NASDAQ:MRVL), a leading fabless chip designer, specializes in wired networking and holds the second-largest market share in the segment. The company serves diverse end markets, including data centers, carriers, enterprises, automotive, and consumer sectors, with a portfolio featuring processors, transceivers, switches, and storage controllers.
MRVL is well-positioned to capitalize on the growing data center custom silicon opportunity, with its technology leadership, end-to-end solution capabilities, and strong customer traction. The company’s shares are up +82% in the last year, but there is potential for further upside as management expects its custom silicon revenue to grow significantly, from sub-$1 billion currently to around $8 billion by 2028, targeting a 20% market share of the $40 billion TAM it has identified. MRVL’s diversified product portfolio, including in emerging areas like AECs and interconnect technologies, also positions it for continued strong growth across its business segments.
Marvell Technology Inc (NASDAQ:MRVL)’s management commented on the explosive growth opportunities ahead during the Barclays 22nd Annual Global Technology Conference. Here is what they said:
“And our revenue, if you remember, at AI Day, we had indicated this year, the year — the fiscal year we’re in, we thought we’d get to something $0.5 billion of custom silicon revenue in AI. Now the reality is we’re running well ahead of that. But that just gives you an idea of we’re, call it, $0.5 billion-plus of customer AI revenue this year, and the TAM is $40 billion by calendar ’28, right? And our goal was to get about 20% share of that number. So from, call it, something sub-billion dollars today to about $8 billion in the space of, call it, the next 4-plus years, I think, that’s the goal we are looking for. And these customers are very much a big part of that. The opportunity is very large with each one of them.”
7. QUALCOMM, Inc. (NASDAQ:QCOM)
Number of Hedge Fund Holders: 74
QUALCOMM, Inc. (NASDAQ:QCOM) develops and licenses wireless technologies while designing chips for smartphones, making it a key player in the industry. With foundational patents in CDMA and OFDMA technologies powering 3G, 4G, and 5G networks, QCOM licenses its IP to nearly all wireless device makers and is the largest global supplier of wireless chips, providing advanced processors to top handset brands. The company also offers RF front-end modules for smartphones and supplies chips to automotive and IoT markets.
QCOM stock is up +16% in the last years and shows solid momentum as the company works on diversifying its business beyond smartphones, targeting $22 billion in revenue from adjacencies over the next 5 years. The automotive sector is a major growth opportunity as well, with the company seeing strong traction in digital cockpit solutions incorporating AI capabilities and expecting ADAS revenue to start materializing in the coming years. In the PC market, QCOM is gaining traction from the shift to AI PCs and projects $4 billion in revenue by 2029, while in smartphones, the focus is centered on premium and high-tier devices, seeing a 10% CAGR fueled by more computing and AI content.
QUALCOMM, Inc. (NASDAQ:QCOM) management commented on their accelerating markets during the UBS Global Technology and AI Conference. Here is what they said:
“I think we see GenAI as a very good accelerant of that opportunity, especially content. I am optimistic about the PC, looking at the landscape right now from the competitive environment we have built. I think we’re well positioned. I think one of the things I said in the earnings call, and I said that design traction is very good. We started with 20 platforms in May. We have 58 designs now by — in November, line of sight to about 100 designs as we get to early 2026. So, I’m excited about that. One thing that we think is very novel is what we’re doing of industrial, which is the same exact thing we did automotive, which is let’s not thinking about building a connected microcontroller for auto.
Let’s build a different platform. That’s exactly what to do with industrial with GenAI at the edge. I’m excited about that, even though that’s new, we’re still going to have to prove as with the annual milestones as we execute. But I think the opportunity of AI at the edge in industrial when you go from cloud back to on-prem is probably underestimated. I think that’s a great opportunity for us.”
6. Applied Materials, Inc. (NASDAQ:AMAT)
Number of Hedge Fund Holders: 74
Applied Materials, Inc. (NASDAQ:AMAT) is the world’s largest manufacturer of semiconductor wafer fabrication equipment (WFE), offering a comprehensive portfolio across the WFE ecosystem. The company leads in deposition technology, which involves layering materials onto semiconductor wafers, and focuses primarily on general-purpose logic chips produced by leading integrated device manufacturers and foundries, including TSMC, Intel, and Samsung.
Despite the stock being down -26% since the July 2024 peak as a result of intensifying US-China export restriction threats, the long-term outlook for AMAT is improving, as for 2025, the company sees strong demand for leading edge technologies accelerating, particularly in high-bandwidth memory, DRAM, advanced packaging and leading logic. AMAT expects to gain share as the industry transitions to Gate-All-Around transistor technology at 2nm. The addressable market for transistor and wiring technologies is growing by about 15% with this transition. The company’s services business is growing at a low double-digit rate, driven by an expanding installed base and increased service intensity for more complex tools. About 85% of AGS revenues are recurring, with 2/3 under long-term contracts, which presents an attractive setup for compounding value in this niche.
Applied Materials, Inc. (NASDAQ:AMAT) also commented on their margin expansion opportunity during the Wells Fargo 8th Annual TMT Summit. Here is what they said:
“If you look at our inventory on our balance sheet, it’s at a much better days of inventory position than it has been over the prior years. I feel really good about that. Along with that comes excess and obsolete material, a great job of managing those costs down.
And one thing I highlighted is that I expect our ability to improve pricing to mature as we go forward. We’ve been working on that process, and that will become a more meaningful benefit in our gross margin trajectory going forward.”
5. Micron Technology, Inc. (NASDAQ:MU)
Number of Hedge Fund Holders: 107
Micron Technology, Inc. (NASDAQ:MU) is a leading global semiconductor company specializing in memory and storage chips, with its primary revenue driven by DRAM and additional exposure to NAND flash chips. Serving a diverse global market, Micron supplies chips for data centers, mobile devices, consumer electronics, industrial applications, and automotive use, leveraging its vertically integrated business model.
Micron Technology, Inc. (NASDAQ:MU) had a strong start to FY2025, with revenue, gross margin and EPS at or above the midpoint of the guidance range. The bulk of strength comes from data center revenue growing over 400% YoY and 40% sequentially, reaching a record level, with data center revenue mix surpassing 50% of the company’s revenue for the first time. MU also delivered record amounts of SSDs, while high-bandwidth memory (HBM) shipments were ahead of schedule, with revenue more than doubling sequentially. The company also rides the effects of Chips and Science Act, finalizing an agreement with the US Department of Commerce for an award of up to $6.1 billion to support advanced DRAM manufacturing fabs in Idaho and New York.
Management of Micron Technology, Inc. (NASDAQ:MU) provided detailed commentary on its HBM potential, which is central to the growth story, during the Q1 2025 earnings call. Here is what they said:
“The HBM market will exhibit robust growth over the next few years. In 2028, we expect the HBM total addressable market (TAM) to grow four times from the $16 billion level in 2024 and to exceed $100 billion by 2030. Our TAM forecast for HBM in 2030 would be bigger than the size of the entire DRAM industry, including HBM, in calendar 2024. This HBM growth will be transformational for Micron, and we are excited about our industry leadership in this important product category.”
4. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 107
Advanced Micro Devices, Inc. (NASDAQ:AMD) designs digital semiconductors for PCs, gaming consoles, data centers, industrial applications, and automotive markets. Known for its expertise in CPUs and GPUs for PCs and data centers, AMD also supplies chips for leading gaming consoles like the Sony PlayStation and Microsoft Xbox. In 2022, AMD acquired Xilinx, a leader in field-programmable gate arrays, to diversify its portfolio and expand opportunities in key markets such as data centers and automotive.
The shares of Advanced Micro Devices, Inc. (NASDAQ:AMD) are down -26% in the last year, but the company shows signs of improving business environment and growth opportunities. AMD currently experiences strong performance in the server CPU and PC markets, driven by its focus on technology leadership, consistent execution, and close collaboration with customers. The company is optimistic about the growth opportunities in the AI market, both in data center GPUs and AI-enabled PCs, while also expecting a gradual recovery in its gaming and embedded segments. AMD laid out a detailed strategy to expand its gross margins through continuous innovation and operational efficiency, and it views itself as a high-performance computing company, open to addressing customer needs across different architectures.
Advanced Micro Devices, Inc. (NASDAQ:AMD) management commented on their explosive data center opportunity, which they expect will fuel the company’s growth until the end of the decade, during the Barclays 22nd Annual Global Technology Conference. Here is what they said:
“Last year, I was here our MI 300x revenue was 0. And so, it’s amazing during this 2024 what we have done as a company from 0 to like going about $5 billion for this 2024. That’s a great success. I think when you look ahead at 2025, we continue to see the continued investment in AI infrastructure build-out that has been ongoing with all our customers, and you guys can see the third-party data also.
Secondly, user case has been increasing dramatically, right? Every week, we see some new use cases in AI, which definitely when you do the influencing, when you have those use cases, you drive return on investment. So, the backdrop of the market continued to be very strong. And for us, the team has been executing extremely well. MI300 ramping successfully and now MI325, we launched literally this quarter, we’ll start to see revenue in the first quarter next year and then MI350 second half next year. So when you look into 2025, we actually have a much stronger product portfolio versus the 2024.”
3. Broadcom Inc (NASDAQ:AVGO)
Number of Hedge Fund Holders: 128
Broadcom Inc (NASDAQ:AVGO), the world’s sixth largest semiconductor company, generates over $30 billion annually and has expanded into software businesses alongside its semiconductor operations. It offers 17 core semiconductor product lines across wireless, networking, broadband, storage, and industrial markets, operating primarily as a fabless designer while manufacturing select products, such as its premium FBAR filters used in Apple iPhones. In software, Broadcom provides virtualization, infrastructure, and security solutions to enterprises, financial institutions, and governments. Formed through major consolidations, Broadcom combines legacy Broadcom and Avago Technologies in semiconductors with Brocade, CA Technologies, and Symantec in software.
Broadcom Inc (NASDAQ:AVGO) reported strong financial results for fiscal year 2024, with consolidated revenue growing 44% year-over-year to a record $51.6 billion. AI revenue grew 220% to $12.2 billion, representing 41% of semiconductor revenue. The company sees a massive AI opportunity over the next 3 years, expecting an AI revenue serviceable addressable market of $60 billion to $90 billion in fiscal 2027 for XPUs and networking from its 3 hyperscale customers. The integration of VMware is largely complete, with VMware revenue on a growth trajectory and operating margin reaching 70% exiting 2024.
Management of Broadcom Inc (NASDAQ:AVGO) provided detailed commentary on its AI opportunity, which is central to the growth story, during the Q4 2024 earnings call. Here is what they said:
“As you know, we currently have 3 hyperscale customers, who have developed their own multi-generational AI XPU Road map to be deployed at varying rates over the next 3 years. In 2027, we believe each of them plans to deploy 1 million XPU clusters across a single fabric. We expect this to represent an AI revenue serviceable addressable market, or SAM, for XPUs and network in the range of $60 billion to $90 billion in fiscal 2027 alone. We are very well positioned to achieve a leading market share in this opportunity and expect this will drive a strong ramp from our 2024 AI revenue base of $12.2 billion. Keep in mind though, this will not be a linear ramp. We’ll show quarterly variability.”
2. Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM)
Number of Hedge Fund Holders: 158
Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) is the world’s largest dedicated chip foundry, commanding over 60% of the market. Founded in 1987, TSMC leverages its scale and advanced technology to maintain strong operating margins in the competitive foundry space. The shift toward the fabless business model has further boosted TSMC, as major customers like Apple, AMD, and Nvidia rely on its cutting-edge process technologies to manufacture their semiconductor designs.
The company experienced an explosive 2024, with its shares up 109% in the last year. TSM remains integral to the AI revolution, leveraging its cutting-edge 3nm and 5nm technologies to drive innovation for key clients, including Nvidia and Apple. In Q4, High-Performance Computing (HPC), encompassing AI and 5G applications, represented 53% of TSM’s revenue, up from 43% the prior year, fueled by rising AI-driven demand. CEO C.C. Wei expressed confidence in managing geopolitical challenges, such as US export controls on AI chips, highlighting the company’s commitment to maintaining open communication with current and future administrations.
Despite geopolitical risks, TSM continues to invest in advanced manufacturing, which contributed 74% of wafer revenue in Q4. With plans to scale 3nm production and prepare for its 2nm technology, the company is positioned to preserve its competitive edge. These advancements are essential for sustaining margins and meeting the demands of AI applications, including Nvidia’s GPUs and Apple’s custom processors.
1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 193
NVIDIA Corporation (NASDAQ:NVDA) is a leading developer of GPUs, traditionally used to enhance computing experiences, particularly in PC gaming. Over time, GPUs have become critical for artificial intelligence applications, with NVDA providing both AI-focused GPUs and its CUDA software platform for AI model development and training. The company is also expanding its data center networking solutions, enabling GPUs to work together efficiently to handle complex workloads.
NVDA clearly had an explosive FY2024 as the stock price returned 146% in the last twelve months alone. While bears argue that the upside from accelerating GPU demand for data center applications has largely been realized and is priced in, NVIDIA Corporation (NASDAQ:NVDA) continues to tap into new markets, thus perpetually expanding its TAM and fueling growth. The company is partnering with IQVIA to develop custom AI models and agentic platforms for clinical trials using its proprietary AI foundry services and DGX Cloud capacity. It also introduced GenMol, a new foundation model for goal-directed molecular generation, as part of its BioNeMo platform for AI-driven drug discovery. Furthermore, NVDA is collaborating with the Arc Institute to develop large-scale foundation models for biology using NVIDIA DGX Cloud infrastructure and BioNeMo. A partnership with Illumina was announced to combine Illumina’s sequencing platforms with NVIDIA’s Clara toolset to expand genomics accessibility and utility. Another partnership with Mayo Clinic is set to accelerate AI-driven digital pathology using NVIDIA DGX Blackwell and applying Cosmos for multimodal vision to understand biology more deeply. The company is advancing physical AI capabilities through its Holoscan healthcare AI robot platform, Cosmos Nemotron vision language models, and Omniverse for creating physics-aware virtual worlds to train robots.
Management of NVIDIA Corporation (NASDAQ:NVDA) has thoroughly discussed its new healthcare opportunity during the 43rd Annual J.P. Morgan Healthcare Conference. Here is what they said:
“Now if you think about the $10 trillion industry that health care has become, a very large portion of that is in labs, hospitals, and operations. And we’re still in a huge labor shortage, 10 million to 15 million to 20 million labor shortage. AI can help. AI is going to help through the delivery of AI agents who can be knowledge workers working on your behalf. They can be in the form of delivery robots, offloading nurses from delivering sheets to a different room. They’re going to become all forms. And this digital intelligence is going to be built on AI factories, just as I described. Data comes in, models get built and refined, assembled into agents, and intelligence comes out.”
NVDA is a semiconductor equipment stock that hedge funds are buying. While we acknowledge the potential of NVDA as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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