We recently compiled a list of the 7 Best Semiconductor Stocks to Buy Now. In this article, we are going to take a look at where NVIDIA Corporation (NASDAQ:NVDA) stands against the other best semiconductor stocks.
In an updated forecast, The World Semiconductor Trade Statistics (WSTS) revised its 2024 projections upward, expecting a strong 19.0% YoY growth in the broader semiconductor market. The global market value for 2024 is now pegged at $627 billion, demonstrating improvement in performance in Q2 2024 and Q3 2024, mainly in the computing sector. Growth in 2024 is expected to be aided by 2 Integrated Circuit segments- Memory, which can increase by 81.0%, and Logic, which is expected to grow by 16.9%.
Region-wise, the Americas and Asia Pacific are well-placed to lead the recovery, with expected growth rates of 38.9% and 17.5%, respectively.
What Lies Ahead for The Semiconductor Market?
WSTS expects broad-based improvement for the semiconductor market in 2025, with an 11.2% growth, resulting in an estimated $697 billion in global market valuation. This growth is expected off the back of the Logic and Memory sectors, which together are expected to surpass $400 billion in value. This consists of a YoY growth of more than 17% for Logic and 13% for Memory. Notably, other semiconductor categories are projected to grow at more modest, single-digit rates, demonstrating a steady expansion for the broader industry.
WSTS believes that, in 2025, all the regions will be well-placed for continued expansion. The Americas and Asia Pacific regions will maintain their double-digit growth year over year.
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Key Trends Likely to Aid Semiconductor Market in 2025
IDC predicted some critical trends in the semiconductor market. While AI-driven rapid growth continues to be on top of the list, the Asia-Pacific IC (Integrated Circuits) design market will continue to heat up. The memory segment is expected to be aided by the increased penetration of high-end products including HBM3 and HBM3e, which are needed for AI Accelerator, and the new generation of HBM4, which is expected to be rolled out in H2 2025. The non-memory segment is expected to be supported by healthy demand for advanced node ICs for AI servers, high-end mobile phone ICs, and WiFi7.
As per IDC, Asia-Pacific IC design product lines remain rich and diversified. Since inventory levels have been stabilizing, demand for personal devices is picking up, and AI computing continues to extend to a wide range of applications, the overall demand for IC design is expected to increase. Mature nodes (22nm-500nm) continue to have a wide range of applications spanning consumer electronics, industrial control, automotive, and other industry segments. Looking ahead, the demand is anticipated to improve after the correction and oversupply. This is expected to be aided by consumer electronics and periodical inventory replenishment across automotive and industrial control sectors.
Our Methodology
To list the 7 Best Semiconductor Stocks to Buy Now, we used a screener and sifted through several online rankings. After getting an initial list of 12-15 stocks, we chose the ones that were popular among hedge funds. Finally, the stocks were arranged in ascending order of their hedge fund sentiment, as of Q3 2024.
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)
Number of Hedge Fund Holders: 193
NVIDIA Corporation (NASDAQ:NVDA) is one of the leading players in the semiconductor business, with expertise in designing and manufacturing advanced graphic processing units (GPUs) and related technologies. The semiconductor industry’s growth is being driven by the global adoption of AI and ML, with the company’s GPUs, such as A100 and H100, critical for AI model training and inference. With the broader industry scaling to meet AI demand, NVIDIA Corporation (NASDAQ:NVDA) is expected to benefit from supplying cutting-edge hardware and software.
Furthermore, the expansion of data centers and analysis needs more powerful and efficient semiconductors. Thus, NVIDIA Corporation (NASDAQ:NVDA)’s leadership in data center GPUs places it well to capture this increasing demand. The company continues to make strides in the AI and semiconductor sectors. It launched new generative AI models and blueprints to further enhance its Omniverse platform, targeting advancing robotics, AVs (autonomous vehicles), and vision AI applications.
Robert W. Baird upped its target price on the shares of NVIDIA Corporation (NASDAQ:NVDA) from $150.00 to $190.00, giving an “Outperform” rating on 21st November. 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 the best semiconductor stocks to buy now. 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.
