While the global chip shortage left a bad taste in many users’ mouths, chip stocks were undoubtedly happy to see it. It was like a license to print money. And though those conditions didn’t last forever, chip stocks built out their capacity for a future that needed ever more of the little processors. Today, many chip stocks are on the rise after reports emerged suggesting that global chip sales will surge in 2024.
Welcoming the news were investors of Intel (NASDAQ:INTC), Qualcomm (NASDAQ:QCOM), and Broadcom (NASDAQ:AVGO), all up fractionally. Meanwhile, Taiwan Semiconductor (NYSE:TSM) gained modestly. However, despite clearly favorable news, AMD (NASDAQ:AMD) lost nearly 3% in Monday morning’s trading.
The word from the Semiconductor Industry Association (SIA) was a shining beacon of hope in the sector, looking for the combined forces of artificial intelligence and automotive chips to push the entire sector higher. The SIA looks for a 13.1% rise in chip sales worldwide, hitting a total of $595.3 billion. Part of that likely comes back to upgrades; last year, chip sales were down 8% worldwide, so the hardware purchased two or more years ago is likely in line for an upgrade. Add on the relatively new markets represented by AI and vehicles, and the picture only improves.
But When Does the Boost Hit?
For investors, the question likely becomes a matter of when the gains start showing up on the bottom line. Some estimates project that the rise won’t really be apparent until later this year. After all, as SIA president and CEO John Neuffer noted, chip sales were modest in 2023’s first half but recovered into the second half. So 2024 will likely be the same way; a comparatively modest opening followed by brisk gains. Neuffer also looked for some help from governments, focusing on “….policies that invest in R&D, strengthen the semiconductor workforce, and reduce barriers to trade…”
Which Chip Stocks Are a Good Buy Right Now?
Turning to Wall Street, the sector’s laggard is AVGO stock, as this Strong Buy-rated stock offers up a 3.1% downside risk on an average price target of $1,191.18 per share. Meanwhile, TSM stock leads the field, as this Strong Buy with an average price target of $138.60 per share boasts an 18.26% upside potential.
