3 Semiconductor Stocks Powering the Digital Age

The semiconductor industry is seeing extreme growth potential driven by technological advancements and the rising demand for gadgets that rely on chips. With most of our daily lives revolving around these devices, semiconductors have indeed become an integral part of our lives.

Amid this backdrop, investors could scoop up shares of fundamentally stable semiconductor stocks, Taiwan Semiconductor Manufacturing Company Limited (TSM), KLA Corporation (KLAC), and QUALCOMM Incorporated (QCOM), which are well-positioned to capitalize on opportunities in the digital age.

The semiconductor industry is experiencing rapid expansion owing to groundbreaking technological advancements across sectors. Innovations like Artificial intelligence (AI), Machine Learning (ML), cloud computing, 5G networks, autonomous vehicles, and big data analytics that rely heavily on semiconductor components are driving the industry growth.

The Semiconductor Industry Association (SIA) reported that global semiconductor sales reached $166 billion in the third quarter of 2024, a 23.2% increase compared to the second quarter of 2023. September sales hit the market’s highest-ever monthly total, fueled by a remarkable 46.3% year-over-year surge in the Americas.

The industry is poised for continued growth, propelled by the surge in global tech shipments. As per Counterpoint, global smartphone shipments are set to grow by 5% year-over-year in 2024, reaching a record 1.23 billion units. Simultaneously, Gartner, Inc. (IT) reports that worldwide PC shipments hit 62.9 million units in the third quarter of 2024.

These favorable trends are reflected in the long-term forecast for the industry as well. A study by Fortune Business Highlights predicts that the global semiconductor market size will reach $2.06 trillion by 2032, growing at a CAGR of 14.9%.

Now, let us dive deep into the fundamentals of three Semiconductor & Wireless Chip stocks, starting with #3.

Stock #3: Taiwan Semiconductor Manufacturing Company Limited (TSM)

Headquartered in Hsinchu City, Taiwan, TSM manufactures, packages, tests, and sells integrated circuits and other semiconductor devices. The company provides a range of wafer fabrication processes and also offers customer and engineering support services, research, designing and investment in tech start-ups.

On November 13, TSM announced the inauguration of the Taichung Zero Waste Manufacturing Center along with the signing of a memorandum of Understanding on carbon capture with the Ministry of Environment.

Such initiatives could strengthen TSM’s sustainability efforts, reduce operational costs, and attract eco-conscious investors, positioning the company for long-term financial growth and global market leadership.

On October 3, TSM announced the signing of a memorandum of understanding with Amkor Technology, Inc. (AMKR) to collaborate and bring advanced packaging and test capabilities to Arizona.

This collaboration enhances TSM’s U.S. operations, bolsters its supply chain, and strengthens its market position, driving growth and financial resilience.

For the fiscal third quarter that ended September 30, 2024, TSM’s net revenue increased 39% year-over-year to $23.50 billion. Its income from operations grew 58.2% from the year-ago value to $11.16 billion. Additionally, the company’s net income and EPS rose 54.2% and 54.1% from the prior year’s quarter to $10.06 billion and $0.39, respectively.

Analysts expect TSM’s revenue and EPS for the fiscal fourth quarter ending December 2024 to increase 32.3% and 52.8% year-over-year to $26.20 billion and $2.20, respectively. Moreover, the company has surpassed the consensus revenue and EPS estimates in all four trailing quarters, which is impressive.

Shares of TSM have surged 14.9% over the past six months and 87.9% over the past year to close the last trading session at $183.84.

TSM’s POWR Ratings reflect its fundamentals. TSM has an A grade for Sentiment and Quality. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.

It is ranked #6 out of 90 stocks in the Semiconductor & Wireless Chip industry. In addition to the POWR Rating highlighted above, you can check TSM’s ratings for Stability, Value, Momentum, and Growth here.

Stock #2: KLA Corporation (KLAC)

KLAC designs, manufactures and markets process control, process-enabling, and yield management solutions for the semiconductor and related electronics industries. The company has three operational segments: Semiconductor Process Control; Specialty Semiconductor Process; and PCB and Component Inspection.

On October 15, KLAC introduced process control and process-enabling solutions for IC substrate (ICS) manufacturing. This would allow KLAC to help customers achieve breakthroughs in packaging interconnect density for chips targeting high-performance applications and enhance the company’s market presence in the semiconductor industry.

On October 3, KLAC announced the completion of phase 1 of its newest manufacturing facility in Singapore. This expansion will help the company gather a dominant market position in the semiconductor market in the region and boost the company’s growth potential.

For the fiscal 2025 first quarter that ended September 30, 2024, KLAC’s total revenues increased 18.5% year-over-year to $2.84 billion. The company’s non-GAAP net income and non-GAAP net income per share rose 25.6% and 27.7% from the prior year’s quarter to $988.15 and $7.33, respectively.

Moreover, as of September 30, 2024, KLAC’s total current assets amounted to $10.23 billion, compared to $10.03 billion on June 30, 2024.

For the fiscal 2025 second quarter (ending December 2024), Street expects KLAC’s revenue and EPS to increase 18.8% and 26.4% year-over-year to $2.95 billion and $7.78, respectively. Moreover, the company has surpassed the consensus revenue and EPS estimates in all four trailing quarters.

KLAC’s shares surged 13.7% over the past year to close the last trading session at $631.47.

KLAC’s solid fundamentals are mirrored in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.

KLAC has an A grade for Quality and a B for Growth and Sentiment. It is ranked #3 out of 90 stocks in the Semiconductor & Wireless Chip industry.

Click here to access KLAC’s ratings for Value, Momentum and Stability.

Stock #1: QUALCOMM Incorporated (QCOM)

QCOM develops and commercializes foundational technologies for the wireless industry including 3G, 4G, 5G and high-performance on-device artificial intelligence. The company’s three operational segments include: Qualcomm CDMA Technologies (QCT); Qualcomm Technology Licensing (QTL); and Qualcomm Strategic Initiatives (QSI).

On October 24, QCOM announced a collaboration with Mistral AI to introduce Mistral’s generative AI models, Ministral 3B and Ministral 8B, to devices powered by the Snapdragon processors.

This positions QCOM to enhance its on-device AI capabilities, driving innovation and boosting market competitiveness to support its growth in the AI-driven technology sector.

On October 23, QCOM announced a multi-year technology collaboration with Google that aims to advance digital transformation in automotive. The partnership accelerates innovation, develops cutting-edge Gen AI-enabled solutions, and strengthens QCOM’s leadership in the AI-driven automotive market.

For the fiscal 2024 fourth quarter that ended September 29, QCOM’s total revenues increased 18.7% year-over-year to $10.24 billion. Its non-GAAP operating income grew 31.4% from the year-ago value to $3.51 billion.

Furthermore, QCOM’s non-GAAP net income and non-GAAP EPS rose 33.3% and 33.2% from the prior year's quarter to $3.04 billion and $2.69, respectively.

The consensus revenue and EPS estimates of $10.96 billion and $2.95 for the fiscal 2025 first quarter ending December 2024 exhibit a year-over-year rise of 10.5% and 7.4%, respectively. Additionally, the company has surpassed the consensus revenue and EPS estimates in all four trailing quarters, which is noteworthy.

Shares of QCOM have gained 22.8% over the past year, closing the last trading session at $156.93.

QCOM’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.

QCOM has an A grade for Quality and a B for Value. It has topped the 90-stock Semiconductor & Wireless Chip industry.

Click here to access QCOM’s ratings for Momentum, Stability, Growth, and Sentiment.

What To Do Next?

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TSM shares fell $1.91 (-1.04%) in premarket trading Wednesday. Year-to-date, TSM has gained 78.30%, versus a 27.56% rise in the benchmark S&P 500 index during the same period.

Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.

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