The semiconductor market is rapidly growing owing to the evolving requirements across the globe. The industry facilitates electronic circuits, which are integral for electronic devices, and hence is expanding with the rising use of electronics and integration across applications.

Given the industry's rosy prospects, it could be wise to watch high-momentum semiconductor stocks Broadcom Inc. (AVGO), NVIDIA Corporation (NVDA), and Micron Technology, Inc. (MU) before the next earnings release.

The semiconductor industry is currently thriving, driven by technological advancements like Artificial Intelligence (AI), Machine Learning (ML), 5G networks, big data, and electric vehicles boosting the demand for semiconductor chips. Also, the increasingly widening scope for chip usage is strongly fueling the market demand.

The Semiconductor Industry Association (SIA) reported global semiconductor sales of $166 billion for the third quarter of 2024, indicating an increase of 23.2% from the prior year’s quarter and a 10.7% increase from the second quarter of 2024. On a monthly basis, global sales totaled $55.3 billion in September 2024, up 4.1% from August 2024 total of $53.1 billion.

Further, the recently announced semiconductor manufacturing incentives announced by the U.S. Department of Commerce for Corning and Powerex are initiatives that will strengthen the U.S. chip industry.

"Today's announced incentives will help build resiliency in the U.S. semiconductor supply chain and bolster domestic manufacturing while also advancing America's economy, national security, and global competitiveness,” said SIA President and CEO John Neuffer.

With these trends, the global semiconductor market is projected to expand to $2.06 trillion by 2032, exhibiting growth at a CAGR of 14.9%, propelled by increasing demand for consumer electronics, technological upgrades, and Integrated Circuits Integration product usage.

Given these favorable market trends, let’s look at the fundamentals of the top three Semiconductor & Wireless Chip stocks, beginning with the third choice.

Stock #3: Broadcom Inc. (AVGO)

AVGO designs, develops, and supplies various semiconductor devices with a focus on complex digital and mixed signal complementary metal oxide semiconductor based devices and analog III-V based products worldwide. It operates through two segments, Semiconductor Solutions and Infrastructure Software.

On November 5, AVGO launched a private cloud platform, VMware Cloud Foundation, which is simple to deploy, easy to consume, and lowers cost and risk. It also unveiled ecosystem partnerships and a private cloud modernization program.

The expanded set of VMware Cloud Foundation (VCF) Advanced Services innovations, ecosystem partnerships, and modernization programs accelerate generative AI application development, cybersecurity initiatives, and sovereign cloud adoption.

On the same date, the company announced major advancements across its VeloCloud product portfolio, including VeloRAIN (Robust AI Networking) architecture, new VeloCloud Edge 4100 and 5100 appliances, and the introduction of Titan, the Broadcom Advantage Partner Program for VeloCloud Managed Service Providers (MSPs).

AVGO's net revenue rose 47.3% year-over-year to $13.07 billion for the third quarter that ended August 04, 2024. The company's non-GAAP operating income grew 43.6% from the year-ago value to $7.95 billion. Also, its non-GAAP net income and EPS totaled $6.12 billion and $1.24, reflecting increases of 33.2% and 18.1% from the prior year's quarter, respectively.

In addition, the company’s adjusted EBITDA increased 41.7% from the year-ago value to $8.22 billion.

Street expects AVGO's revenue for the fourth quarter (ended October 2024) to increase 51.6% year-over-year to $14.09 billion, while its EPS for the same period is expected to improve 25.9% year-over-year to $1.39. Furthermore, the company surpassed the consensus revenue and EPS estimates in each of the trailing four quarters, which is impressive.

AVGO’s shares have gained 33.8% over the past six months and 88.9% over the past year to close the last trading session at $178.91.

AVGO's bright prospects are reflected in its POWR Ratings. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.

AVGO has a B grade for Sentiment and Quality. Within the Semiconductor & Wireless Chip industry, AVGO is ranked #47 out of 90 stocks.

Click here to access additional ratings of AVGO for Growth, Value, Stability, and Momentum.

Stock #2: NVIDIA Corporation (NVDA)

NVDA offers graphics, computing, and networking solutions worldwide. The company operates in two segments: Compute & Networking and Graphics. It offers GeForce GPUs for gaming and PCs, the GeForce NOW game streaming service and related infrastructure, and solutions for gaming platforms.

On October 28, NVIDIA announced that xAI’s Colossus supercomputer cluster comprising 100,000 NVIDIA Hopper Tensor Core GPUs in Memphis, Tennessee, achieved significant scale with the help of NVIDIA Spectrum-X™ Ethernet networking platform, designed to deliver superior performance to multi-tenant, hyperscale AI factories.

Also, on October 21, NVDA expanded its collaboration with Microsoft to support AI startups, emphasizing healthcare and life sciences. The announcement was made at the HLTH healthcare innovation conference. The initiative integrates NVDA’s Inception program with Microsoft for Startups, allowing access to cloud credits, AI development software, and expert technical and business support.

The strategic partnership is projected to increase the demand for the company’s AI hardware and software solutions, thereby boosting revenues.

NVDA's revenue rose 122.4% from the prior year’s quarter to $30.04 billion for the second quarter, which ended on July 28, 2024. Its non-GAAP operating income rose 156.4% from the year-ago value to $19.94 billion. The company reported non-GAAP net income of $16.95 billion and $0.68 per share, indicating increases of 151.5% and 151.8% from the prior-year quarter, respectively.

In addition, the company’s free cash flow rose 122.9% from the prior-year quarter to $13.48 billion.

According to the company’s outlook for the third quarter fiscal 2025, NVDA projects revenue of $32.50 billion, plus or minus 2%.

Street expects NVDA’s revenue and EPS for the third quarter (ended October 2024) to increase 81.8% and 84.4% year-over-year to $32.93 billion and $0.74, respectively. Moreover, it has surpassed the consensus revenue and EPS estimates in each of the trailing four quarters, which is impressive.

NVDA’s stocks have surged 60.7% over the past six months and 198.8% over the past year to close the last trading session at $145.26.

NVDA's robust growth prospects are reflected in its POWR Ratings. The stock has an A grade for Sentiment and a B grade for Quality. Within the same industry, NVDA is ranked #38 out of 90 stocks.

Click here to access additional ratings of NVDA for Value, Growth, Momentum, and Stability.

Stock #1: Micron Technology, Inc. (MU)

MU designs, develops, manufactures, and sells memory and storage products internationally. The company operates in four segments: Compute and Networking Business Unit; Mobile Business Unit; Embedded Business Unit; and Storage Business Unit.

On October 15, MU announced the availability of a brand new category of clock driver memory by introducing its Crucial® DDR5 clocked unbuffered dual inline memory modules and clocked small outline dual memory modules. MU’s CUDIMM and CSODIMM solutions are the industry’s first commercially available JEDEC-standard DDR5 CUDIMM and CSODIMM solutions.

The solutions provide more speed stability, faster downloads, and better refresh rates, representing a completely new frontier of memory form factors for next-generation PCs.

During the fourth quarter that ended August 29, 2024, MU’s revenue increased 93.3% year-over-year to $7.75 billion. The company’s non-GAAP operating income came in at $1.93 billion against an operating loss of $4.82 billion during the previous year’s quarter. In addition, the company’s non-GAAP net income and EPS amounted to $1.47 billion and $1.30 for the quarter, respectively.

According to the company’s first quarter 2025 outlook, MU projects revenue of $8.70 billion, and its EPS is expected to be $1.74.

Analysts expect MU's revenue and EPS for the second quarter (ending February 2025) to increase 55.4% and 369.7% year-over-year to $9.05 billion and $1.97, respectively. Also, the company topped the consensus revenue and EPS estimates in all four of the trailing quarters.

Shares of MU have surged 1.8% over the past month and 45.3% over the past year to close the last trading session at $108.65.

MU’s POWR Ratings reflect its robust prospects. The stock has an A grade for Growth. MU is ranked #34 among 90 stocks in the Semiconductor & Wireless Chip industry.

To access additional MU ratings for Value, Stability, Quality, Sentiment, and Momentum, click here.

What To Do Next?

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NVDA shares fell $0.06 (-0.04%) in after-hours trading Tuesday. Year-to-date, NVDA has gained 199.52%, versus a 26.77% rise in the benchmark S&P 500 index during the same period.

Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.

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