Wall Street analysts gave these three semiconductor stocks “Strong Buy” ratings. Furthermore, I believe they these stocks have significant growth potential. Analyst ratings have a reputation of sometimes overshooting the mark when combined with a well-reasoned investment thesis. However, they can provide valuable insights and a reasonable starting point into the potential of a company.
So here are three strong buy semiconductor stocks for investors to consider in April this year. I think these companies are all worth at least an addition to one’s watch list. They as poised to become winners in the long-term for aggressive investors.
Semiconductor Stocks With Strong Buy Ratings: Broadcom (AVGO)
Broadcom (NASDAQ:AVGO) specializes in manufacturing custom chips, also known as application-specific integrated circuits (ASICs).
For 2024, AVGO has projected a positive outlook, aiming for a revenue target of approximately $50 billion, which would mark a significant 40% increase from the previous year. This growth is bolstered by its acquisition of VMware.
Despite these positive indicators, AVGO’s GAAP net income for the first quarter of fiscal year 2024 experienced a decline due to higher operating expenses, primarily from the VMware acquisition. However, its non-GAAP net income, which adjusts for acquisition-related costs among other items, showed an increase.
The reason I’m bullish on AVGO comes down to its valuation and its potential for what I believe ot be a strong chance for a stock split in the future, which is generally followed by improved perceptions amongst analysts that the company’s stock price will increase in the future.
AVGO has around half the market capitalization of NVDA, and its cheaper on a P/E and P/S basis, even when accounting for differences in operating segments. This then positions it favorably from a fundamental and capital-appreciation perspective.
Advanced Micro Devices (AMD)
Advanced Micro Devices (NASDAQ:AMD) is one of those semiconductor stocks that has received strong buy ratings from Wall Street. It’s also considered somewhat of an underdog in the industry and has received meme stock status.
Market sentiment is therefore strongly on AMD’s side, and its fundamentals lay out a logical baseline for future growth, which is why I think it could surprise many in the coming quarters this year.
For Q1 2024, AMD anticipates sales around $5.4 billion, which is below the $5.73 billion analysts expected. This initial guidance led to a temporary dip in AMD stock.
However, AMD’s forward P/E of 45 times earnings suggests a dramatic improvement in its earnings according to analysts. This is contrasted with its current P/E of 315 times earnings. Analysts are pricing in an upside of around 12.62% within the next twelve months, and this also comes with a huge 590.20% predicted EPS increase.
It might be hard to find a stronger bull thesis than AMD right now with its mix of investor confidence and positive forecasts, which then makes it one of those semiconductors to buy.
Taiwan Semiconductor Manufacturing (TSM)
Taiwan Semiconductor Manufacturing (NYSE:TSM) is the world’s largest contract chipmaker, anticipating more than 20% revenue growth in 2024.
I think that TSM could also have a great year throughout 2024, with the semiconductor industry significantly outpacing the growth of the average of companies in the Nasdaq. TSM plans a capital expenditure (Capex) budget ranging from $28 billion to $32 billion. Meanwhile, the company anticipates revenue growth, expecting the overall semiconductor market (excluding memory) to grow by more than 10% in 2024, with the foundry industry expected to see approximately 20% growth.
Long-term, TSM is expanding its global manufacturing footprint to mitigate geopolitical risks and meet growing demand. New fabs are under development in Japan, Arizona, Europe, and Taiwan. This to me helps to reduce the main bugbears that U.S. investors have about investing in TSM, namely the conflicts between the PRC and Taiwan, and tensions boiling across the Taiwan strait.
With these risks reduced, I think that upside is more pronounced than ever, which then makes it one of those semiconductor stocks to buy.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Matthew started writing coverage of the financial markets during the crypto boom of 2017 and was also a team member of several fintech startups. He then started writing about Australian and U.S. equities for various publications. His work has appeared in MarketBeat, FXStreet, Cryptoslate, Seeking Alpha, and the New Scientist magazine, among others.