In this article, we discuss the 35 chip stocks powering the AI boom.
AI has played a pivotal role in driving growth within the semiconductor market, transforming it into one of the most lucrative sectors globally. As AI applications proliferate across industries — from cloud computing and autonomous vehicles to healthcare — demand for advanced semiconductor technologies has surged. NVIDIA, a leader in AI GPUs, reported record revenues exceeding $30 billion in Q2 2024, largely driven by AI-related chip sales. Jensen Huang, the CEO of the chipmaker, remarked that AI was the most powerful technology force of the time and was transforming industries across the board.
AI demands massive data processing capabilities, which in turn requires highly specialized semiconductors like GPUs, TPUs, and AI accelerators. Experts highlight that 75% of AI workloads rely on advanced chips designed specifically for machine learning and deep learning tasks. Research firm Gartner predicts that 70% of all new AI applications by 2025 will require hardware accelerators, primarily in data centers and edge computing environments, underscoring the critical role of AI in the semiconductor ecosystem. As AI models become more complex, they require exponentially larger memory and storage solutions.
Read more about these developments by accessing 30 Most Important AI Stocks According to BlackRock and AI News You Should Not Have Missed.
AI models like GPT-4 by OpenAI and PaLM by Google have billions of parameters, and memory-intensive High Bandwidth Memory (HBM) chips are crucial for training and inference. This has led to a significant increase in the production of memory chips, with AI-related demand accounting for a large portion of the $500 billion semiconductor industry. AI-focused startups and established companies alike are benefiting from this growth. For instance, the AMD acquisition of Xilinx in 2022 was aimed at enhancing AI capabilities, resulting in a major competitive advantage in AI chips.
However, the rosy picture has been dented in recent weeks on the back of a major selloff in the tech sector and increased volatility in the semiconductor space. Robert Maire, the chief of Semiconductor Advisors, a prominent financial consulting firm, recently appeared on news platform CNBC to discuss the market volatility in the chip sector, highlighting factors like earnings not being enough to keep stocks at inflated values and the threat of possible Chinese oversupply in trailing edge semiconductors. Maire said that AI has been the only driver of growth in the semi market, leading to a situation where investors got ahead of themselves.
Maire highlighted during his appearance that China was still lagging behind the US and Europe in the leading-edge AI space, as it had been deprived of tools needed to keep pace with change in this market. However, the chip advisor claimed that Chinese firms have caught up in the trailing edge AI space, citing examples of Chinese firms like Semiconductor Manufacturing International Corporation and Hua Hong Semiconductor Limited already exceeding US-based firms like UMC and GlobalFoundries in capability. He cautioned that despite progress, Chinese firms were still not doing enough to challenge US-based leaders in the trailing edge space.
Read more about these developments by accessing 33 Most Important AI Companies You Should Pay Attention To and 20 Industrial Stocks Already Riding the AI Wave.
Our Methodology
For this article, we selected companies that operate in the semiconductor sector and have exposure to the AI industry. These stocks are also popular among hedge funds. 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).
A robotic arm holding a semiconductor chip, emphasizing the precision and quality of the company’s production equipment.
Chip Stocks Powering AI Boom
35. EMCORE Corporation (NASDAQ:EMKR)
Number of Hedge Fund Holders: 2
EMCORE Corporation (NASDAQ:EMKR) designs and manufactures fiber optic gyro, ring laser gyro, and micro electromechanical system-based inertial sensors and systems. Some key AI-related products of the firm include Quartz MEMS and Fiber Optic Gyroscope (FOG) Inertial Measurement Units (IMUs). These are used for precision navigation and stabilization in various unmanned systems, such as drones and autonomous vehicles. The company also markets TACNAV Tactical Navigation Systems that are widely deployed in military vehicles and are used for real-time navigation and situational awareness, often integrated into larger AI systems for automated decision-making in defense operations.
EMCORE Corporation (NASDAQ:EMKR) is viewed with caution by finance experts. Craig-Hallum recently lowered the price target on the stock to $1 from $2 and kept a Hold rating, noting that while the stock was very cheap, the overriding concern that the advisory had remained on the balance sheet. In an investor note, analysts at the advisory underlined that investors were waiting for progress on the balance sheet and approaching breakeven before expecting the market to value the stock appreciably higher.
34. ChipMOS TECHNOLOGIES INC. (NASDAQ:IMOS)
Number of Hedge Fund Holders: 4
ChipMOS TECHNOLOGIES INC. (NASDAQ:IMOS) markets semiconductor assembly and testing services. These advanced semiconductor packaging and testing services play a critical role in the broader ecosystem that supports AI technologies. They are essential for the development and manufacturing of high-performance chips used in AI applications like data centers, edge computing, and communication devices. For example, ChipMOS’s expertise in testing high-density memory and mixed-signal semiconductors directly contributes to the functionality of AI hardware, where high-speed data processing is crucial.
ChipMOS TECHNOLOGIES INC. (NASDAQ:IMOS) recently reported a 15.4% year-on-year growth in revenue for August, led by the continued healthy DDIC demand and slight improvement in utilization rate. The revenue for the month of August 2024 was more than $66 million, representing an increase of 2.5% from July 2024.
33. STMicroelectronics N.V. (NYSE:STM)
Number of Hedge Fund Holders: 16
STMicroelectronics N.V. (NYSE:STM) makes and sells semiconductor products. The company has long-term exposure to structural growth areas such as the energy transition, data centers, and microcontrollers. The company recently launched a smart sensor with edge AI processing for motion tracking in industrial and robotics applications. In June, the firm had launched the STAI suite, bringing together tools, software and knowledge to simplify and accelerate edge AI application development.
STMicroelectronics N.V. (NYSE:STM) has attracted bull calls from Wall Street. TD Cowen analyst Matthew Ramsay recently lowered the price target on the stock to $40 from $50 and kept a Buy rating, noting that auto was modestly down with SiC growth feels doable, but the sharp industrial correction was not getting better and implied 4Q guidance still was not a layup given elevated channel, adding that the firm needed a clean quarter, probably two, to rebuild investor confidence.
32. Ultra Clean Holdings, Inc. (NASDAQ:UCTT)
Number of Hedge Fund Holders: 17
Ultra Clean Holdings, Inc. (NASDAQ:UCTT) provides tools and subsystems for the semiconductor market. The firm generates a significant portion of revenue from AI-related technologies, particularly through demand for advanced packaging and equipment that supports High Bandwidth Memory. This has been a key growth area for the chip firm, especially as AI technologies require sophisticated semiconductor components. In the second quarter of 2024, UCT reported total revenues of $516 million, with strong contributions from AI-related products. The company’s CEO, Jim Scholhamer, highlighted the importance of AI and advanced packaging in driving business forward during the earnings call.
Ultra Clean Holdings, Inc. (NASDAQ:UCTT) is an underrated AI play. Craig-Hallum recently raised the price target on the stock to $60 from $52 and kept a Buy rating, noting that management had said they were beginning to see signs of a broader market improvement beginning in later 2024 instead of early next year, and in the next up cycle, Ultra Clean could exceed its previous annual earnings per share peak of $4.2 seen in 2021.
31. MaxLinear, Inc. (NASDAQ:MXL)
Number of Hedge Fund Holders: 17
MaxLinear, Inc. (NASDAQ:MXL) provides systems-on-chips solutions. The firm is exposed to the AI industry mainly through data infrastructure products, which support AI-driven applications. The company produces semiconductors used in wireless networks, optical datacenters, and broadband systems, all crucial for enabling AI technologies. The revenue in Q1 2024 for the firm was $95 million, with an annual revenue of $448 million over the last twelve months. The AI-related products of the firm play a key role in markets such as enterprise Ethernet, storage accelerators, and high-speed connectivity, which are essential for handling the data-intensive demands of AI systems.
MaxLinear, Inc. (NASDAQ:MXL) is viewed with caution on Wall Street. Loop Capital recently lowered the price target on the stock to $12 from $21 and kept a Hold rating, noting the company’s Q2 earnings miss and below-consensus guidance reported last month, but highlighting that while MaxLinear still had the PAM4 DSP catalyst a tad ahead of it, broadband inventory in the channel remained elevated and Telecom was also soft, with added pressure coming from US-China tensions as well as regulatory compliance requirements.
30. GlobalFoundries Inc. (NASDAQ:GFS)
Number of Hedge Fund Holders: 21
GlobalFoundries Inc. (NASDAQ:GFS) provides a range of mainstream wafer fabrication services and technologies worldwide. The stock has rallied in the past few months due to AI opportunities, CHIPS Act funding, and inventory stabilization. Some of the prominent growth drivers for the business include Automotive and AI markets, where the firm has benefited from design wins and partnerships, especially in RF technology for smartphones and data centers. The firm specializes in mature nodes and niche markets like IoT, 5G, and defense, ensuring stable margins and positive free cash flow.
GlobalFoundries Inc. (NASDAQ:GFS) is one of the top AI picks in the finance world. Evercore ISI analyst Mark Lipacis has an Outperform rating on the stock with a price target of $71. In a recent investor note, the analyst noted that GlobalFoundries posted Q2 revenues and Q3 revenue outlook above Street estimates and reiterated expectations for quarter-over-quarter growth through 2024 helped by meaningful year-over-year growth in Auto and gradual recovery in most other markets.
29. Axcelis Technologies, Inc. (NASDAQ:ACLS)
Number of Hedge Fund Holders: 25
Axcelis Technologies, Inc. (NASDAQ:ACLS) markets ion implantation and other processing equipment used for the fabrication of semiconductor chips. The company is heavily involved in enabling the production of AI chips used in sectors like automotive and industrial automation. For the first half of 2024, Axcelis reported $508 million in revenue, with its Power segment, which includes silicon carbide and other components crucial for AI-driven applications, as a major growth driver. This segment continues to expand due to increased demand from AI and electric vehicle sectors.
Axcelis Technologies, Inc. (NASDAQ:ACLS) has grabbed the attention of finance experts. B Riley analyst Craig Ellis recently lowered the price target on the stock to $165 from $190 and kept a Buy rating, noting that the absence of more pronounced seasonal PC and smartphone demand acceleration had left general mature foundry a little softer than Axcelis expected, and this was an industry rather than company-specific issue.
28. Lattice Semiconductor Corporation (NASDAQ:LSCC)
Number of Hedge Fund Holders: 28
Lattice Semiconductor Corporation (NASDAQ:LSCC) makes and sells semiconductor products. The AI-related products of the company primarily focus on low-power Field-Programmable Gate Arrays (FPGAs) that enable advanced AI applications at the edge. For example, Lattice’s FPGAs are optimized for AI workloads in endpoint smart cameras and automotive vision systems, reducing power consumption and enhancing AI processing at the edge. In Q1 2024, the company projected quarterly revenues of $120 million to $140 million, with AI-related solutions being a growing focus in sectors like communications, automotive, and industrial applications.
On November 15, Lattice Semiconductor Corporation (NASDAQ:LSCC) was positively covered on Wall Street. Raymond James analyst Srini Pajjuri recently upgraded the stock to Outperform from Market Perform with a $50 price target. In an investor note, the analyst noted that the cyclical correction was largely behind the company and expected upward earnings revisions to start in the next two quarters. The analyst added that Lattice’s Industrial and Auto segment declined 50% year-over-year in Q2, but a gradual recovery was expected on inventory normalization even if end demand was mixed.
27. Fortive Corporation (NYSE:FTV)
Number of Hedge Fund Holders: 33
Fortive Corporation (NYSE:FTV) designs, develops, manufactures, and services professional and engineered products, software, and services in the United States, China, and internationally. The firm has integrated AI-driven technologies across divisions, particularly in the Intelligent Operating Solutions and Precision Technologies segments. These divisions use AI for process automation, data analytics, and enhancing industrial operations. The Intelligent Operating Solutions division, where AI solutions are a key driver, generated $1.34 billion in sales for the first half of 2024. The firm expects continued growth in AI applications, expecting margins to improve and operating profit to increase by 10-13% in the coming months.
Fortive Corporation (NYSE:FTV) is trending on Wall Street as AI plays become popular. Morgan Stanley analyst Christopher Snyd recently initiated coverage of the stock with an Overweight rating and $89 price target, noting that megatrends and inflated cost profiles were sharpening the focus on efficiency, and US industrial growth would return to 300 basis points above gross domestic product.
26. Monolithic Power Systems, Inc. (NASDAQ:MPWR)
Number of Hedge Fund Holders: 35
Monolithic Power Systems, Inc. (NASDAQ:MPWR) engages in the design, development, marketing, and sale of semiconductor-based power electronics solutions for the computing and storage, automotive, industrial, communications, and consumer markets. The firm is heavily exposed to AI verticals. In the latest earnings report, the firm posted 16% quarter-over-quarter increase in data-related sales. In the previous two quarters, this figure was 30% and 106%, respectively. Year-over-year, the jump in sales was 217% in the first quarter of 2024, representing 33% of total sales. These numbers offset slowing demand from other sectors like consumer, industrial, and automotive.
Monolithic Power Systems, Inc. (NASDAQ:MPWR) has earned bullish reviews from top market experts. Raymond James recently raised the price target on the stock to $925 from $770 and kept an Outperform rating, noting that enterprise data again led the strong upside in the quarter, largely driven by continued momentum in the GPU ecosystem, and Monolithic Power maintained a leadership position in the fastest growing applications for AI datacenter power, with incremental drivers coming as other end markets began to inflect higher.
25. Corning Incorporated (NYSE:GLW)
Number of Hedge Fund Holders: 35
Corning Incorporated (NYSE:GLW) engages in the display technologies, optical communications, environmental technologies, specialty materials, and life sciences businesses. The optic products offered by the firm have witnessed a surge in demand in the past few months as large companies invest in AI data centers. In addition to these connectivity products, the firm also provides the glass that is on top of popular smartphone brands. These smartphones are becoming AI powerhouses in themselves. The company grew the optical business by over 40% in the second quarter, compared to the same period last year, due to AI demand, even as the smartphone market remained soft.
Wendell Weeks, the CEO of Corning Incorporated (NYSE:GLW), detailed during the second quarter earnings call that the growth in revenue, sales, and earnings during the first half of 2024 was primarily driven by strong adoption of optical connectivity products due to soaring demand for generative AI. Weeks noted that new AI data centers needed about 10 times the fiber optic connections utilized by normal data centers, largely due to compute power of new GPUs and the need to connect the GPUs together. He said his firm had helped customers design the links needed for this kind of interconnectivity over the past few years.
24. Keysight Technologies, Inc. (NYSE:KEYS)
Number of Hedge Fund Holders: 36
Keysight Technologies, Inc. (NYSE:KEYS) provides electronic design and test solutions to industries in the Americas, Europe, and the Asia Pacific. The firm is heavily involved in AI. particularly through the testing, measurement, and simulation solutions that support AI applications in fields like telecommunications, aerospace, and automotive industries. Some of the notable AI-related products include EDA Software for RF Circuit Design, Network Emulators, and Signal Generators and Oscilloscopes. These AI-related solutions are part of a broader product portfolio of the firm which contributed to an overall revenue of $1.22 billion in Q3 2024.
Keysight Technologies, Inc. (NYSE:KEYS) has started grabbing the attention of Wall Street analysts. Deutsche Bank recently raised the price target on the stock to $175 from $163 and kept a Buy rating, noting the company was poised to deliver a meaningful inflection towards positive growth heading into fiscal 2025 and remained a key beneficiary of several multi-year themes, including artificial intelligence, 5G/6G, autonomous vehicles, semi onshoring and rising defense spend.
23. Entegris, Inc. (NASDAQ:ENTG)
Number of Hedge Fund Holders: 37
Entegris, Inc. (NASDAQ:ENTG) develops, manufactures, and supplies microcontamination control products, specialty chemicals, and advanced materials handling solutions. The firm markets specially mixed liquids and gasses that are used in semiconductor manufacturing facilities. The firm recently announced that it had entered into a long-term supply agreement with Onsemi, a manufacturer of advanced energy-efficient power semiconductors. Under the deal, the former will provide the latter a range of co-optimized chemical mechanical planarization solutions for silicon carbide applications.
Bertrand Loy, the CEO of Entegris, Inc. (NASDAQ:ENTG), said during the second quarter earnings call that the company was the first materials supplier to be awarded funding through the CHIPS Act, validating the importance of the position of the firm in the chip market. He also noted that AI-driven growth was propelling markets forward in chips and memory.
22. Arm Holdings plc (NASDAQ:ARM)
Number of Hedge Fund Holders: 38
Arm Holdings plc (NASDAQ:ARM) architects, develops, and licenses central processing unit products and related technologies for semiconductor companies and original equipment manufacturers. Raymond James recently started coverage of the British company with an Outperform rating and a $160 price target. The analysts at the advisory noted that Arm, as the dominant supplier of energy-efficient processor/subsystems IP, was well-positioned to benefit from rapid growth of generative Al in the cloud and at the edge. The analysts expect content increases in mobile along with higher penetration of ARM architecture in auto, data center and PC markets to drive sustainable double-digit growth for the next several years.
Rene Haas, the CEO of Arm Holdings plc (NASDAQ:ARM), said during the first quarter earnings call that companies everywhere were investing in AI, driving revenue and bookings for his firm which posted a fourth consecutive quarter of record earnings, growing revenue by 39% year-on-year. License revenue during the period was up 70% year-on-year while royalty revenue was up 17% year-on-year.
21. Amkor Technology, Inc. (NASDAQ:AMKR)
Number of Hedge Fund Holders: 39
Amkor Technology, Inc. (NASDAQ:AMKR) provides semiconductor packing and test services. These packaging services are crucial for advanced semiconductor chips used in AI applications, such as in data centers, automotive AI systems, and consumer electronics. In the second quarter of 2024, the semiconductor firm reported $1.46 billion in total net sales, with 88% from packaging services. The advanced products offered by the company, which include AI-related semiconductor services, contributed approximately $1.18 billion to these sales. The AI and high-performance computing markets are growing sectors within the service offerings of Amkor.
Amkor Technology, Inc. (NASDAQ:AMKR) has earned bullish reviews from Wall Street. Needham analyst Charles Shi recently raised the price target on the stock to $45 from $40 and kept a Buy rating, noting that the company’s slight Q3 guidance miss should not diminish its growing strength as Amkor management had hinted that high-end smartphones, laptops, and wearable devices were ramping rapidly in the second half of the year as planned.
20. Teradyne, Inc. (NASDAQ:TER)
Number of Hedge Fund Holders: 41
Teradyne, Inc. (NASDAQ:TER) designs, develops, manufactures, and sells automated test systems and robotics products globally. In the past few months, investments in advanced semiconductor manufacturing and fabrication have more than tripled, topping $100 billion as manufacturers race to meet the increase in demand for complex chips that are used to run demanding applications for AI products. This has subsequently led to an increase in demand for automated test equipment (ATE), a specialty of Teradyne. ATEs are critical since they bring up AI devices quickly, optimize their yield, and improve silicon performance.
In the second quarter earnings call, Greg Smith, the CEO of Teradyne, Inc. (NASDAQ:TER), explained how Cloud AI products were driving strong demand for ATEs across chip and memory markets. In the first half of 2024, the company was able to exceed the revenue it had made from chipmakers in all of 2023.
19. ON Semiconductor Corporation (NASDAQ:ON)
Number of Hedge Fund Holders: 45
ON Semiconductor Corporation (NASDAQ:ON) provides intelligent sensing and power solutions in the United States and internationally. The Intelligent Sensing department of the company focuses on designs and development for imaging sensors and image signal processors, which are becoming increasingly important, especially in automotive and industrial automation and in AI-powered applications. The firm markets innovative power supply solutions used to power high-density servers that can handle the larger data loads and intense power consumption required to power many Gen-AI applications and tools. For example, the multiphase controllers of ON are able to accurately and quickly supply power to all server racks in AI data centers, making them more energy efficient compared to competitors.
ON Semiconductor Corporation (NASDAQ:ON) is one of the most trusted chipmakers on Wall Street. Truist recently raised the price target on the stock to $97 from $85 and kept a Buy rating, noting that the company’s Q2 results and Q3 outlook were better than feared as the management was doing well relative to what it could control in terms of product development, design wins, and cost management.
18. Microchip Technology Incorporated (NASDAQ:MCHP)
Number of Hedge Fund Holders: 46
Microchip Technology Incorporated (NASDAQ:MCHP) develops, manufactures, and sells smart, connected, and secure embedded control solutions in the Americas, Europe, and Asia. The firm integrates artificial intelligence into several products, especially in fields like industrial automation and smart manufacturing. One of the key offerings includes solutions for predictive maintenance, where AI helps monitor equipment and anticipate failures to reduce downtime. The Internet of Medical Things (IoMT) solutions marketed by the firm also leverage AI, assisting in healthcare innovations, like smart pill dispensers that manage medication compliance.
Microchip Technology Incorporated (NASDAQ:MCHP) is keenly followed on Wall Street. Citi analyst Christopher Danely recently reiterated a Buy rating on the stock with a $92 price target, noting that after the company disclosed that its information technology systems were breached, manufacturing operations had been impacted and could impede the ability to fill orders. However, Citi claimed that while unfortunate, the impact also seemed temporary and did not have anything to do with inventory or demand.
17. TE Connectivity Ltd. (NYSE:TEL)
Number of Hedge Fund Holders: 46
TE Connectivity Ltd (NYSE:TEL) manufactures and sells connectivity and sensor solutions. The firm primarily focuses on providing these solutions for industries like automotive, industrial, and data communications. The AI-related offerings are mainly embedded in sensor technologies, which are used in applications like autonomous vehicles, smart factories, and connected devices. TE also integrates AI into edge computing solutions. The sensor and connectivity products contribute significantly to the overall revenue of the company, which was about $16 billion last year. The firm posted close to $4 billion in revenue for the third quarter of 2024.
TE Connectivity Ltd (NYSE:TEL) is on the radar of Wall Street analysts. Wolfe Research recently assumed coverage and upgraded the stock to Outperform from Peer Perform with an $187 price target. In an investor note, the advisory highlighted that revenues for TE Connectivity had been virtually flat for the last two years, mainly reflecting inventory destocking across several end-markets, but while there was still a tough macro backdrop, the company appeared well-poised to grow the top-line.
16. Texas Instruments Incorporated (NASDAQ:TXN)
Number of Hedge Fund Holders: 50
Texas Instruments Incorporated (NASDAQ:TXN) designs, manufactures, and sells semiconductors to electronics designers and manufacturers. Although the firm does not directly market AI-related products, it makes and sells several microcontrollers and processors that support machine learning and AI applications, especially in embedded systems and edge computing. For example, the firm markets TI Sitara Processors that are designed for industrial applications and feature AI capabilities to enable machine learning at the edge. They are often used in robotics, smart cameras, and industrial automation. It also makes TI Jacinto Processors that are primarily used in automotive applications and offer AI and deep learning capabilities for advanced driver-assistance systems (ADAS) and autonomous driving.
Texas Instruments Incorporated (NASDAQ:TXN) has been turning heads on Wall Street. Citi recently upgraded the stock to Buy from Neutral with a price target of $235, up from $200. In an investor note, the advisory detailed that the company hosted a capital management call recently and lowered its 2026 capex from $5 billion to $2 billion – $5 billion, with intimated gross margins bottoming, indicating earnings growth ahead when inventory replenishment happened.
15. NXP Semiconductors N.V. (NASDAQ:NXPI)
Number of Hedge Fund Holders: 52
NXP Semiconductors N.V. (NASDAQ:NXPI) makes and sells various products related to semiconductors. Latest US export restrictions in relation to chip firms doing business in China have increased concerns around NXP as the chipmaker derives more than 35% of sales from business with China-based firms. Jeff Palmer, the vice president of investor relations at the company, recently spoke at a Goldman Sachs conference, downplaying concerns around the new export controls and noting that there was a difference between NXP working with Chinese entities and international firms with bases in China. The confidence is backed by management decisions. Last month, NXP authorized a $2 billion share repurchase program and a dividend program for shareholders.
NXP Semiconductors N.V. (NASDAQ:NXPI) is viewed with caution on Wall Street. Morgan Stanley recently lowered the price target on the stock to $271 from $275 and kept an Equal Weight rating, noting that NXP guided for the September-end quarter in line with estimates, but below consensus. In an investor note, the advisory claimed that while clearly past the bottom in automotive, the recovery was muted as some customers were still depleting inventory.
14. KLA Corporation (NASDAQ:KLAC)
Number of Hedge Fund Holders: 55
KLA Corporation (NASDAQ:KLAC) markets process control and yield management solutions for the semiconductor industry. The company expects the foundry and logic business to experience tailwinds going into the second half of 2024 as capital investments in chip manufacturing ramp up across the United States. These investments will also impact process control products and tools and services business amid growing demand for metrology systems and advanced packaging systems. Chip designers are seeking to bolster their advanced chips with KLA products to support the demand driven by AI infrastructure.
KLA Corporation (NASDAQ:KLAC) has attracted the attention of analysts on Wall Street. Argus recently raised the price target on the stock to $875 from $800 and kept a Buy rating, citing the company’s Q4 earnings beat, and also noting that its quarterly revenue and EPS grew on a year-on-year basis for the first time in five quarters. In an investor note, the advisory underlined that memory demand also continued to recover sequentially and grew year-over-year in the quarter in a positive sign for demand recovery.
13. Analog Devices, Inc. (NASDAQ:ADI)
Number of Hedge Fund Holders: 64
Analog Devices, Inc. (NASDAQ:ADI) designs, manufactures, tests, and markets integrated circuits (ICs), software, and subsystems products. As other chip makers struggle, ADI has shown impressive inventory management. The second quarter earnings of the firm highlighted this fact, as across all other peers in the analog space, ADI saw the largest year-over-year decline in inventory in the latest quarter. This was the fourth consecutive quarter that ADI reduced inventory on the balance sheet. These numbers indicate that the company has a lot more flexibility to ramp up production to capture new incremental demand in AI without the need to pressure gross margins.
Vincent Roche, the CEO of Analog Devices, Inc. (NASDAQ:ADI), said during the second quarter earnings call that data center customers were investing in new vertical power architectures to meet the intensified energy and processing demands of AI compute systems. Per Roche, the solutions offered by his firm in this regard reduced power losses by up to 35% compared to existing architectures. This product is now gaining traction with hyperscalers.
12. Amphenol Corporation (NYSE:APH)
Number of Hedge Fund Holders: 72
Amphenol Corporation (NYSE:APH) primarily designs, manufactures, and markets electrical, electronic, and fiber optic connectors. It has a range of product offerings for AI firms, including chipsets, networking products, and server and GPU solutions. The firm also markets high speed power connectors used in data centers that compute AI tasks for large software firms. NVIDIA is one of the largest customers of the company and recent reports that the chipmaker may be forced to redesign the GB200 platform because of overheating issues has caused concern around Amphenol revenues. The latter provides flyover cables for the GB200 that may be replaced by circuit boards in newer models of the platform as NVIDIA fixes heating issues.
Adam Norwitt, the CEO of Amphenol Corporation (NYSE:APH), commented during the second quarter earnings call that between March and June, bookings for the firm were particularly strong from IT datacom customers focused on artificial intelligence, even though traditional datacom orders also saw a nominal increase. Norwitt added that his firm expected to grow sales in the datacom segment during the third quarter as customers flocked towards the leading high-speed and power interconnect products manufactured by the company.
11. Marvell Technology, Inc. (NASDAQ:MRVL)
Number of Hedge Fund Holders: 74
Marvell Technology, Inc. (NASDAQ:MRVL) makes and sells semiconductors. The firm recently posted second quarter earnings that beat analyst expectations and also released guidance numbers that were well above Street estimates. The data center revenue of the company attracted a lot of attention in the finance world. In the second quarter earnings, the firm reported that revenue from the data center segment nearly doubled year over year, totaling $880 million compared to $459 million previously. However, there were year-over-year revenue declines in other end-markets for the company, including enterprise networking, carrier infrastructure, consumer and automotive/industrial.
AI tailwinds have forced the generally skeptical analysts on Wall Street to turn bullish on Marvell Technology, Inc. (NASDAQ:MRVL) stock. For example, investment advisory KeyBanc has an Overweight rating on the shares with a price target of $95. In a recent investor note, the advisory pointed out that feedback indicates that the demand for optical networking was robust across all segments for the firm, including 800G/400G/200G, and the AI outlook stood to benefit from a meaningful ramp of AWS Trainium/Inferentia and Google Axion.
10. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 75
Intel Corporation (NASDAQ:INTC) markets key technologies for smart devices. Latest reports reveal that Intel has qualified for around $3.5 billion in government grants to make semiconductors for the US military. Under the program, dubbed Secure Enclave, Intel will aim to establish production for advanced chips with military and intelligence applications. The program will span multiple states, including a manufacturing facility in Arizona. Intel stock had nosedived in the past few weeks on the back of reports that the firm was considering the sale of the foundry business as part of a larger overhaul of operations.
Intel Corporation (NASDAQ:INTC) has received bearish ratings on Wall Street after the quarterly earnings report of the company showed disappointing growth figures and guidance that fell short of analyst expectations. The company has also recently decided to lay off around 15,000 workers. The chipmaker has begun internal meetings aimed at restructuring the business around AI, with options like selling off subsidiaries and splitting the firm on the table.
9. Applied Materials, Inc. (NASDAQ:AMAT)
Number of Hedge Fund Holders: 77
Applied Materials, Inc. (NASDAQ:AMAT) provides equipment, services, and software for the semiconductor industry. The company has emerged as a top AI play because of the strength of the DRAM and HBM businesses. DRAM represents around 25% of total semiconductor systems revenue. In the third fiscal quarter of this year, the company achieved 50% year-over-year growth in the DRAM business. This growth was impressive because it happened despite an 11% decline in China. The strength of the DRAM business of Applied Materials lies in investments in key advanced technologies that it has made over the past few years, including Gate-All-Around transistors and backside power delivery.
Applied Materials, Inc. (NASDAQ:AMAT) is a top chip firm on Wall Street. Stifel recently lowered the price target on the stock to $270 from $275 and kept a Buy rating, noting that the Q3 results and outlook of the chipmaker modestly exceeded consensus estimates, reflecting gradual growth in system and service revenue, despite revenue to China being down 24% quarter over quarter, and with China exposure now more de-risked, the advisory underlined that Applied was well-positioned to grow at/above the industry in 2025.
8. ASML Holding N.V. (NASDAQ:ASML)
Number of Hedge Fund Holders: 81
ASML Holding N.V. (NASDAQ:ASML) makes and sells advanced semiconductor equipment systems. The company has made a name for itself in the AI universe because it is an important supplier to the chip industry. One of the premier products of the firm is the High NA EUV machine. This machine, estimated to cost nearly $380 million, offers greater precision and resolution thanks to a higher numerical aperture. This, in turn, translates to the development of an advanced system around the machine that can manufacture chips with small and complex structures. The firm has many famous customers for this machine, including TSM, Samsung, and Intel, among others.
ASML Holding N.V. (NASDAQ:ASML) is a top European chip stock, according to Wall Street analysts. Bank of America has a Buy rating on the shares with a price target of EUR 1,064. In a recent investor note, the advisory firm cut fiscal 2025 and 2026 estimates of the chipmaker by 11% and 8%, respectively, on the back of lower revenue assumptions, but noted the highly attractive risk/reward profile of the firm at current levels, describing the recent pull back as a particularly enhanced buying opportunity.
7. Lam Research Corporation (NASDAQ:LRCX)
Number of Hedge Fund Holders: 84
Lam Research Corporation (NASDAQ:LRCX) markets semiconductor processing equipment. The company is the third leading supplier of wafer fab equipment. This equipment is used by chipmakers in their chip manufacturing process. The demand for these chips has skyrocketed as firms seek to power their data centers with these chips for AI tasks. Timothy Archer, the CEO of Lam Research Corporation (NASDAQ:LRCX), commented during the second quarter earnings call that the power of AI as a transformative business tool was still yet to be fully realized. He noted that the focus on AI model training was driving strong demand for GPUs and HBM. He added that as AI use cases expanded, investments for AI-enabled edge devices would play particularly well to the strengths of his firm in the long term.
Lam Research Corporation (NASDAQ:LRCX) has attracted the attention of analysts on Wall Street. Raymond James recently raised the price target on the stock to $1,060 from $950 and kept an Outperform rating, backing SemiCap sector fundamentals to remain strong into 2025 due to secular growth from Gen AI, aggressive government subsidies around the world, multiple technology transitions, and intensifying competition among foundry suppliers.
6. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 100
QUALCOMM Incorporated (NASDAQ:QCOM) engages in the development and commercialization of foundational technologies for the wireless industry. The company has been making efforts to capture a larger portion of the personal computer (PC) market as the sales of AI PCs take off. In line with this strategy, it recently introduced the Snapdragon X Plus 8-core processor. The new chip would enable OEMs to offer AI features in PCs in the $700 to $900 range. Tech giant Microsoft also uses QCOM chips in their latest Surface PCs that come loaded with AI features. Other PC firms that will use QCOM chips in their new products include Acer, ASUS, Dell Technologies, HP, Lenovo, and Samsung, among others.
QUALCOMM Incorporated (NASDAQ:QCOM) is viewed with bearish leanings on Wall Street. Wolfe Research recently downgraded the stock to Peer Perform from Outperform without a price target. In an investor note, the advisory detailed that recent supply chain checks indicated that Apple had made progress on its internal modem for the iPhone, and the move to an internal modem would be a headwind for Qualcomm’s QCT revenue.
5. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 108
Advanced Micro Devices, Inc. (NASDAQ:AMD) operates as a semiconductor manufacturer. AMD CEO Lisa Su spoke during a Goldman Sachs conference recently, noting that the AI boom was a computing super cycle and there was no one player or architecture that would take over. The CEO stressed that she expected the adoption of AI PCs to pick up in 2025, noting that some investors mistakenly believed the AI PC demand would explode in 2024. She noted that this was the beginning of the AI supercycle and next year AI PCs would be part of the commercial refresh cycle in the tech space.
Advanced Micro Devices, Inc. (NASDAQ:AMD) has earned bullish calls from Wall Street. Wedbush has an Outperform rating on the stock with a price target of $200. In a recent investor note, the advisory underlined that the ZT acquisition was likely both strategic and opportunistic for AMD as the chipmaker was able to purchase ZT at a discount likely in part due to changing conditions in the original design manufacturers market and particularly Foxconn’s increased presence within the Nvidia server supply chain.
4. Micron Technology (NASDAQ:MU)
Number of Hedge Fund Holders: 120
Micron Technology (NASDAQ:MU) makes and sells memory and storage products. There is compelling evidence that the firm will deliver solid returns for investors in the coming months. The chip firm looks set to benefit from accelerating spending on AI products, including high-bandwidth memory solutions. One such area within memory solutions, that of HBM3E, has an escalating shipment ramp that could yield strong margin pictures. Micron stock also trades at an attractive P/E ratio of 7x, well below the industry average in the semi space. The firm is expected to release the quarterly earnings report later this month.
Micron Technology (NASDAQ:MU) is keenly followed by analysts on Wall Street. Raymond James recently lowered the price target on the stock to $125 from $160 and kept an Outperform rating, noting that the price target decrease reflected slower near-term volume growth in non-HBM DRAM and NAND markets, as reiterated by management at recent investor conferences, and highlighted that a higher peak multiple was justified given the strong secular growth from HBM.
3. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 130
Broadcom Inc. (NASDAQ:AVGO) supplies semiconductor infrastructure software solutions. Even as chip markets remain volatile, Broadcom seems well-positioned to deliver solid returns in the space over the next few years. This is because the firm has robust growth through custom AI chips, and the increasing networking demand also supports top line expansion. In addition, the company also has a high-margin subscriptions and services segment and strong enterprise backlog, further bolstering long-term prospects. Analysts expect another dividend raise likely by the end of 2024. The chipmaker has rich free cash flow and a historical commitment to shareholder returns that is rare in the semi space.
Broadcom Inc. (NASDAQ:AVGO) remains an important chip stock on Wall Street. Benchmark has a Buy rating on the stock with a price target of $210. In a recent investor note, the advisory claimed that the earnings report of the chipmaker was being looked to as some sort of savior of the AI momentum trade following a week of incredibly poor performance in most AI related names. Analysts at the advisory, however, highlighted that Broadcom delivered a solid report without any material soft points even though the AI business lacked the clear upside momentum the Street was looking for.
2. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 156
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) makes and sells integrated circuits and semiconductors. The company recently posted sales numbers for August, indicating strong demand for AI products. The firm, which manufactures processors for NVIDIA, Apple, AMD, and other tech giants heavily spending on AI hardware for their AI data center build, said revenue for August came in at around $7.8 billion, up 33% from August 2023, but was down 2.4% from July. The revenue for the eight months ended in July jumped over 30% to almost $55 billion.
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is one of the favorite chip stocks on Wall Street. JPMorgan recently raised the price target on the stock to NT$1,200 from NT$1,080 and kept an Overweight rating, highlighting that TSM was now firmly on course to improve margins in the next few years. In an investor note, the advisory detailed that together with continued strong demand for artificial intelligence accelerators and leading market position, strong earnings growth was expected from TSM in the next few years.
1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 179
NVIDIA Corporation (NASDAQ:NVDA) operates as a visual computing firm. Latest reports reveal that AI startup CoreWeave is considering a share sale ahead of an expected IPO. The startup is based in New Jersey and provides cloud access to AI GPUs for training large language models, inference and high-performance computing applications. Per reports, the startup, backed by companies like NVIDIA, will allow employees to sell shares worth $500 million, putting the valuation of the firm at around $23 billion. Last year, the startup was valued at around $7 billion. In May this year, it was valued at $19 billion.
NVIDIA Corporation (NASDAQ:NVDA) is the top sector pick of Bank of America. The advisory has a Buy rating on the stock with a price target of $165. In a recent investor note, the investment advisor acknowledged that the firm faced several near-term headwinds that could suppress the stock, including fundamental ones like the Blackwell delay and gross margin pressure. However, analysts at Bank of America underlined that these headwinds had created an enhanced buying opportunity with the stock trading within the lowest quartile of valuation in the past five years.
While we acknowledge the potential of NVIDIA Corporation (NASDAQ:NVDA) as an investment, our conviction lies in the belief that some 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 NVIDIA Corporation (NASDAQ:NVDA) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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