These are the 3 Best Semiconductor Stocks to buy in April 2024, as per Wall Street analysts. The artificial intelligence (AI) realm relies heavily on advanced and ever-evolving semiconductor chips. These advanced chips are used to accelerate AI technology, machine learning, deep learning algorithms, and the training of large language models (LLMs). Without these chips, the existence of our highly-skilled chatbots would be impossible.
As you can very well fathom the importance of chip producers in the AI gamut, let’s delve into the three semiconductor stocks that have won analysts’ favor and have attractive upside potential.
#1 Marvell Technology Group Ltd. (NASDAQ:MRVL)
Marvell Technology is a semiconductor company that designs, develops, and markets analog, mixed and digital signal processing, and embedded and standalone integrated circuits. The company’s portfolio of semiconductor technology bolsters the functioning of AI, cloud, carrier, automotive, and enterprise infrastructure.
In Fiscal 2024, MRVL posted adjusted earnings per share (EPS) of $1.51 per share on net revenue of $5.51 billion. The results showed a decline from the prior year’s figure of adjusted earnings of $2.12 per share on net revenue of $5.92 billion.
For Q1 FY25, the company expects net revenue of $1.150 billion (+/- 5%) and adjusted EPS of $0.23 (+/- $0.05). Recently, Marvell announced that it has secured a third hyperscale customer for making AI custom chips, reflecting its growing AI capabilities. The company even stated at its recent AI event that it expects AI revenue to exceed $2.5 billion by FY26 compared to about $200 million earned in FY23.
Is Marvell Stock a Good Buy?
With 27 Buys versus one Hold recommendation, MRVL stock has a Strong Buy consensus rating on TipRanks. The average Marvell Technology price target of $89.42 implies 37.1% upside potential from current levels. In the past year, MRVL shares have gained 59%.
#2 Advanced Micro Devices, Inc. (NASDAQ:AMD)
AMD is a fabless semiconductor designer that invents new types of semiconductors and outsources manufacturing to foundries. The company’s chips are used in cloud computing and AI space. AMD is expected to compete intensely with rival Nvidia (NASDAQ:NVDA) in the days ahead, given the huge potential of its MI300X accelerator.
Notably, AMD is set to disrupt the AI-enabled PC market with the recent launch of its 4-nanometer technology for use in laptops and desktops. These chips will be used by leading computer makers beginning the second quarter of this year, thus adding billions of dollars to the company’s top line.
AMD is scheduled to release its Q1 FY24 results on April 30. The Street expects AMD to post adjusted EPS of $0.62 on revenues of $5.48 billion (mostly in line with AMD’s guidance). The figures do not show any notable jump compared to the prior-year figure.
Despite the soft guidance, analysts remain bullish on AMD stock owing to the huge potential of its MI300X accelerator and the growing market for server CPUs.
Is AMD a Buy, Hold, or Sell?
With 29 Buys and six Hold ratings, AMD stock commands a Strong Buy consensus rating on TipRanks. The average Advanced Micro Devices price target of $202.81 implies 30.8% upside potential from current levels. In the past year, AMD shares have gained 72.4%.
#3 Micron Technology Inc. (NASDAQ:MU)
Micron manufactures integrated circuits, computer processors, and storage devices such as random-access memory (RAM), flash memory, and USB flash drives. The company designs and fabricates semiconductor chips and installs them in the end products, i.e., the electronic components.
For the three months ending February 29, 2024, MU posted an adjusted income of $0.42 per share, significantly exceeding the Street’s expectation of an adjusted loss of $0.25 per share. Also, Micron’s revenue came in better than expected at $5.82 billion, up 57.7% year-over-year. The results were followed by a series of price target updates by impressed Wall Street analysts.
For Q3 FY24, Micron guided for revenue of $6.60 billion (± $200 million) and adjusted earnings of $0.45 (± $0.07) per share. Meanwhile, the Street expects adjusted EPS of $0.44 on revenue of $6.56 billion.
Meanwhile, Micron is reportedly set to secure $6.1 billion in government funding under the Biden administration’s CHIPS and Science Act, to manufacture advanced chips in New York and Idaho.
Is Micron a Buy or Sell?
On TipRanks, MU stock has a Strong Buy consensus rating, backed by 25 Buys, one Hold, and one Sell rating. The average Micron Technology price target of $126.96 implies 13.4% upside potential from current levels. MU shares have gained 84.6% in the past year.
Ending Thoughts
Semiconductor companies are considered as high growth stocks, playing a vital role in the exploding AI space. Investors looking to gain a reasonable risk-reward combination can consider the above three semiconductor stocks to bolster their portfolio with potential outsized returns.
