10 Best Semiconductor Stocks According to Billionaires
In this article, we discuss the 10 best semiconductor stocks according to billionaires. To skip the detailed analysis of the semiconductor industry, go directly to the 5 Best Semiconductor Stocks According to Billionaires.
The semiconductor industry is arguably one of the most important segments of the market. It is the backbone of our modern digital era. Our society’s dependence on electronic devices and interconnected systems increases day by day, and due to that, the importance of the semiconductor industry becomes more and more definite. The semiconductor industry is directly or indirectly connected to all the sectors of the market.
Over the last few years, the importance and demand of semiconductors have become ever more pronounced. Initially, it started from an increased interest in blockchain technology and cryptocurrencies. As that trend started to fade away, the generative AI trend led to another boom in the industry. The computational needs for such technologies paved the way for some of the best semiconductor stocks, like NVIDIA Corporation (NASDAQ:NVDA) and Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), to create ample opportunities for investors. NVIDIA Corporation (NASDAQ:NVDA)’s market cap was somewhere around $400 billion in December 2022 and jumped to $1 trillion by the second quarter of 2023. At the time of writing on December 8, the company had a market cap of $1.17 trillion. Furthermore, its stock has gained over 230% year-to-date (YTD)
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the company that makes all of NVIDIA Corporation (NASDAQ:NVDA)’s chips. While the company’s third-quarter revenues fell year-over-year (YoY), its stock price is up nearly 35% YTD at the time of writing on December 8. However, its stock price gain is not solely dependent on the AI boom but also on better-than-expected sales due to Apple Inc. (NASDAQ:AAPL)’s iPhone 15 launch. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the primary chip supplier of Apple Inc. (NASDAQ:AAPL).
Advanced Micro Devices, Inc. (NASDAQ:AMD) has also made some noise in the AI segment as it unveiled its latest AI accelerator, Instinct MI300X, on December 6. The company also raised its AI Accelerator total addressable market to $400 billion from the prior $150 billion. At the Barclays’ Global Technology Conference, Advanced Micro Devices, Inc. (NASDAQ:AMD)’s CFO Jean Hu said:
“It's actually a very important milestone and inflection point for AMD to be a strong player in AI compute space. We all know the opportunities are tremendous, and we are really pleased we get to the point we can be very competitive in this marketplace. There are so many announcements yesterday. So, what I'll do today is just highlight some of the key things we announced yesterday. You can absolutely listen to the webcast and it's super exciting. First and foremost is, we formally launched MI300A and MI300X and highlighted the performance advantage we have, especially when you think about the inference, MI300X has the industry-leading memory bandwidth and capacity. So, it provide better TCOs for customers. You can either run more models or you can use less GPUs. So, it's a great product, very competitive. And as we said during our last earnings call, MI300 will be the fastest revenue, $2 billion in our history. And we are very confident about the $2 billion-plus revenue number we talk about for 2024.”
Talent Shortage Concerns in the Industry
A report by the Semiconductor Industry Association (SIA) states that the semiconductor industry’s workforce will increase from 345,000 in July 2023 to 460,000 jobs by 2030, representing a 33.33% growth. While the availability of jobs is something that should be considered good news, the SIA predicts that 58% of projected new jobs are at risk of being unfilled, considering the current degree completion rates. Additionally, while AI is just one growth catalyst of the industry that we mentioned, McKinsey believes that due to autonomous and e-mobility technologies, the semiconductor demand in the automotive sector could triple by 2030. These factors can lead to labor and supply shortages in the future.
While the SIA predicts this labor shortage at the end of the decade, recent events have shown that the industry is already lacking skilled labor. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)’s Arizona plant has been delayed till 2025 due to labor shortages. Furthermore, the company’s plan to build a facility in Germany is also facing the problem of insufficient skilled labor.
Semiconductor Industry Outlook
A December report by the World Semiconductor Trade Statistics organization predicts that the annual global semiconductor sales will decline by 9.4% YoY in 2023 yet increase by over 13% in 2024 to $588.4 billion. The previously mentioned McKinsey report believes that it will become a trillion-dollar industry by 2030, growing at the rate of 6%-8%.
We previously reported that the global semiconductor market was valued at $664.2 billion in 2023 and will grow at a compound annual growth rate of 12.28% through 2032, reaching $1.88 trillion.
Going by the forecasts, it is evident that there is no stopping the semiconductor industry's growth. Billionaires are also buying into the industry. Some of the best semiconductor stocks, according to billionaires, include NVIDIA Corporation (NASDAQ:NVDA), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), and Lam Research Corporation (NASDAQ:LRCX). One of the most famous hedge fund billionaires, Stanley Druckenmiller of Duquesne Capital, kept NVIDIA Corporation (NASDAQ:NVDA) as his 13F portfolio’s top stock pick in the third quarter of 2023 and said:
"If it's as big as I think it is, Nvidia is something we are going to want to own for at least two or three years [...] I do believe, unlike crypto, AI is real … it could be as transformative as the internet."
If you aren’t sure about which semiconductor stocks you should invest in, here are the 10 Best Semiconductor ETFs. You can also check out other billionaire stock picks on Billionaire Druckenmiller’s 10 Stocks Picks with Huge Upside Potential, and Billionaires Are Betting On These 10 Energy Stocks.
An aerial view of a high-tech factory, showing the impressive scale of the company's semiconductor production.
Our Methodology
For this article, we made a list of semiconductor and semiconductor equipment and materials stocks listed on NYSE and NASDAQ using the Yahoo Finance stock screener. From that list, we determined the number of billionaires that bought the companies’ shares during Q3 2023 through Insider Monkey’s database. We listed these stocks in ascending order of the number of their billionaire investors.
Best Semiconductor Stocks According to Billionaires
10. Analog Devices, Inc. (NASDAQ:ADI)
Number of Billionaire Investors: 15
Dollar Value of Billionaire Holdings: $962.265 million
Analog Devices, Inc. (NASDAQ:ADI) is a semiconductor company that carries out the development and marketing of analog, mixed-signal, and digital signal-processing integrated circuits (ICs). The corporation serves more than 125K customers and has around 8K patents under its belt.
On November 21, Analog Devices, Inc. (NASDAQ:ADI) posted its Q4 earnings result with a non-GAAP EPS of $2.01 and revenue of $2.72 billion. For Q1 fiscal 2024, the company forecasted revenue of around $2.5 billion, reported EPS to be around $0.91, and adjusted EPS to be somewhere around $1.70.
On November 21, Analog Devices, Inc. (NASDAQ:ADI) announced a quarterly dividend of $0.86, payable by December 14 to the shareholders of record on December 4. At the time of writing on December 8, the dividend yield of the stock was 1.87%.
Analog Devices, Inc. (NASDAQ:ADI) is one of the best semiconductor stocks according to billionaires, along with NVIDIA Corporation (NASDAQ:NVDA), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), Lam Research Corporation (NASDAQ:LRCX).
Ensemble Capital Management mentioned Analog Devices, Inc. (NASDAQ:ADI) in its third quarter 2023 investor letter. Here is what it said:
“Analog Devices, Inc. (NASDAQ:ADI): Analog Devices, known in the industry as ADI, makes semiconductor chips that predominantly operate at the boundary of the physical world and the digital world, more commonly referred to as analog and mixed signal chips. These chips usually play a supporting role to the sexier “digital brain” that is the latest and greatest processor from Nvidia, Intel, AMD, Apple, or Qualcomm. While the digital brains get a lot more media attention, the supporting analog chips are as vital as those big expensive digital processors in driving value in electronic devices, which are becoming ubiquitous and intelligent throughout our lives.
Anything with an on-off switch requires lots of these analog chips if it is going to relay input and output information with the physical world as well as manage the electrical power supply feeding the device. While these analog chips are relatively inexpensive to manufacture and distribute, it takes a long time to design and build a catalog of literally thousands of specific products to create the scale that makes them economically attractive businesses with a reputation of dependability and quality…” (Click here to read the full text)
9. Micron Technology, Inc. (NASDAQ:MU)
Number of Billionaire Investors: 16
Dollar Value of Billionaire Holdings: $1.81 billion
Micron Technology, Inc. (NASDAQ:MU) is an Idaho-based company that manufactures and provides storage and memory products and solutions under the brands of Micron and Crucial.
On December 6, Mizuho raised the price target on Micron Technology, Inc. (NASDAQ:MU)’s stock to $86 from $82 and kept a Buy rating. According to the analyst, there will be positive tailwinds for memory going into 2024 for DRAM and NAND.
On November 28, Micron Technology, Inc. (NASDAQ:MU) updated its first-quarter fiscal 2024 guidance. It now expects the quarter’s revenue to be near $4.7 billion, up from the prior range of $4.2 billion to $4.6 billion. The company commented that it expects the non-GAAP gross margins to break even, compared to the previously announced guidance of -4%, plus or minus 2%.
As per Insider Monkey’s proprietary data, 16 billionaires had investments in Micron Technology, Inc. (NASDAQ:MU)’s stock at a combined value of $1.81 billion in Q3.
8. Intel Corporation (NASDAQ:INTC)
Number of Billionaire Investors: 17
Dollar Value of Billionaire Holdings: $1.079 billion
Intel Corporation (NASDAQ:INTC) is a California-based tech company that manufactures and sells products like microprocessors, chipsets, embedded processors, microcontrollers, and more.
On December 4, Intel Corporation (NASDAQ:INTC) announced that it signed a Memorandum of Understanding with Siemens AG to collaborate and advance the digitalization and sustainability of microelectronics manufacturing.
On November 7, The Wall Street Journal reported that Intel Corporation (NASDAQ:INTC) is in the lead to receive billions of dollars in government funding for secure facilities manufacturing microchips. While the exact amount has not been disclosed, the funding would be from the $39 billion manufacturing grants authorized under the Chips Act 2022.
ClearBridge Investments commented on Intel Corporation (NASDAQ:INTC) in its third quarter 2023 investor letter. Here is what it said:
“We also added to our position in Intel Corporation (NASDAQ:INTC) to take advantage of signs that it continues to make progress on its goal of regaining technology leadership. Intel appears to be executing its technology/product roadmap; the company is on track to ramp up PC and server products over the next 12 months on advanced manufacturing nodes that we believe will be more competitive with chief rival Advanced Micro Devices. We also see green shoots in the PC and server markets, with an increasing possibility of a cyclical recovery in both end markets in 2024.”
7. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Billionaire Investors: 17
Dollar Value of Billionaire Holdings: $1.46 billion
QUALCOMM Incorporated (NASDAQ:QCOM) develops wireless telecommunication products like semiconductors and software and provides related services. It is one of the best semiconductor stocks, according to billionaires.
Over the last three months, 20 Wall Street analysts covered QUALCOMM Incorporated (NASDAQ:QCOM), and 13 kept a Buy rating on the stock. The average price target of $137.83 represents an upside of 2.97% at the time of writing on December 8.
According to Insider Monkey’s database, 17 billionaires were bullish on QUALCOMM Incorporated (NASDAQ:QCOM)’s stock with a combined dollar value of $1.46 billion in the third quarter.
6. Broadcom Inc. (NASDAQ:AVGO)
Number of Billionaire Investors: 17
Dollar Value of Billionaire Holdings: $3.1 billion
Broadcom Inc. (NASDAQ:AVGO) manufactures storage adapters, controllers and ICs, wireless, wired and optical products, and provides mainframe and enterprise software and cybersecurity software.
On December 7, Broadcom Inc. (NASDAQ:AVGO) announced an increase in its quarterly dividend by 14.1% to $5.25. It is payable by December 29 to the shareholders of record on December 20.
On December 7, Broadcom Inc. (NASDAQ:AVGO) posted its Q4 non-GAAP EPS of $11.06, which beat the analysts’ estimates by $0.10. The revenue increased by 4.1% YoY to $9.3 billion and topped the estimates by $20 million.
NVIDIA Corporation (NASDAQ:NVDA), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), and Lam Research Corporation (NASDAQ:LRCX) are the best semiconductor stocks according to billionaires besides Broadcom Inc. (NASDAQ:AVGO).
Broadcom Inc. (NASDAQ:AVGO) was mentioned in ClearBridge Investments’ second quarter 2023 investor letter. Here is what it said:
“While the ClearBridge Multi Cap Growth Strategy has limited mega cap exposure, which has been a recent headwind to relative performance, we own several companies that stand to benefit from the explosive growth in generative AI. These holdings play key roles in building out the necessary infrastructure and helping customers leverage capabilities enabled by this emerging technology.
Semiconductor and software solutions provider Broadcom Inc. (NASDAQ:AVGO), for example, is an important supplier of networking chips that power ethernet switches and routers for connectivity between AI servers. The company sees quarterly revenue from this part of their business exceeding $1 billion in their fiscal third quarter, on a trajectory toward doubling over the course of the year.”
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Disclosure. None. 10 Best Semiconductor Stocks According to Billionaires is originally published on Insider Monkey.