We recently published a list of 10 High Growth Semiconductor Stocks That Are Profitable Heading into 2025. In this article, we are going to take a look at where NVIDIA Corporation (NASDAQ:NVDA) stands against other high growth semiconductor stocks that are profitable.
Semiconductors have led industrial advancements and aided key applications such as personal computing, data centers, and cloud computing. As per PwC, Memory ICs were the fastest-growing semiconductor category over the previous 2 decades, with DRAM and HBM standing out. The broader DRAM market is supported by cost and scale, while HBM, because of its advanced technological requirements, reflects a high-barrier, closed-loop ecosystem.
Global Semiconductor Sales Rose 20.7% YoY in November 2024
The Semiconductor Industry Association (SIA) announced that global semiconductor sales touched $57.8 billion during November 2024 month, demonstrating 20.7% growth as compared to November 2023 total of $47.9 billion and 1.6% growth as compared to the October 2024 total of $56.9 billion. As per the report published by SEMI (Semiconductor Equipment and Materials International), the semiconductor industry is expected to begin 18 new fab construction projects in 2025. These new projects will include three 200mm and fifteen 300mm facilities. Notably, the majority will begin operations from 2026 – 2027.
In 2025, the Americas and Japan will be the leading regions with 4 projects each. Next, China and Europe & Middle East regions have 3 planned construction projects. Finally, Taiwan has 2 planned projects, with Korea and Southeast Asia having 1 project each for this year. As per SEMI’s President and CEO, investments have been fueling leading-edge and mainstream technologies to cater to dynamic global demands. Gen-AI and high-performance computing continue to fuel advancements in the leading-edge logic and memory segments. However, mainstream nodes have supported crucial automotive, IoT, and power electronics applications.
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Semiconductor Capacity to Ramp Up
SEMI projects semiconductor capacity to accelerate further, with a 6.6% yearly growth rate to a total of 33.6 million wafers per month (wpm) for 2025. This expansion is expected to primarily stem from leading-edge logic technologies in high-performance computing (HPC) applications and higher penetration of generative AI in edge devices. Overall, the broader semiconductor industry continues to focus on building advanced computing capabilities, and responding to the increased computational demands of LLMs.
Moving forward, foundry suppliers are expected to be the leaders in purchases of semiconductor equipment. The Foundry segment can increase capacity by 10.9% YoY, increasing from 11.3 million wpm in 2024 to 12.6 million wpm in 2025.
Our Methodology
To list the 10 High Growth Semiconductor Stocks That Are Profitable Heading into 2025, we conducted extensive research and scanned through several online rankings to shortlist companies having ~10% revenue growth over the previous 5 years and TTM net income of at least $400 million. We also mentioned the hedge fund sentiments around each stock, as of Q3 2024. Finally, the stocks were ranked in ascending order of their hedge fund sentiments.
At Insider Monkey we are obsessed with 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 close-up of a colorful high-end graphics card being plugged in to a gaming computer.
NVIDIA Corporation (NASDAQ:NVDA)
5-year Sales Growth: ~62.43%
TTM net income: $63,074 Million
Number of Hedge Fund Holders: 193
NVIDIA Corporation (NASDAQ:NVDA) is a renowned player in the semiconductor business and is known for innovative GPUs and expanding portfolio of products for AI, gaming, and data centers. As per Barclays analyst Tom O’Malley, NVIDIA Corporation (NASDAQ:NVDA) GPU sales touched ~$100 billion in calendar 2024 and are projected to grow to ~$160 billion in calendar 2025. The analyst further added that custom silicon has just started to become more significant and is expected to grow at a faster compounded rate over the upcoming 3 years (at 55%).
Considering the ongoing focus on the AI compute end-market, the analyst remains optimistic about NVIDIA Corporation (NASDAQ:NVDA)’s growth prospects. For calendar 2025, the analyst anticipates the company to grow its data-center compute business by ~60% YoY. Therefore, Tom O’Malley reiterated an “Overweight” rating and upped his price target to $175 from $160 on the company’s shares.
Furthermore, NVIDIA Corporation (NASDAQ:NVDA)’s strong position in the AI computing market offers a strong foundation for continued growth. Its comprehensive technology stack, which includes hardware and software solutions, provides a significant advantage in catering to the growing demand for AI infrastructure. Infuse Asset Management, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“We do still own some NVIDIA Corporation (NASDAQ:NVDA) as the forward multiple isn’t egregious and it powers over 90% of AI workloads. This company is only becoming increasingly important though the hyperscalers are actively trying to save money through their own ASIC programs. The moat CUDA provides has been underestimated time and time again. While I don’t think Nvidia has quite the upside as some of the other companies in the portfolio, it has a product that the best companies in the world literally can’t get enough of.”
Overall, NVDA ranks 1st on our list of high growth semiconductor stocks that are profitable heading into 2025. While we acknowledge the potential of NVDA as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued 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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Disclosure: None. This article is originally published at Insider Monkey.
