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The semiconductor industry is staging a solid rebound on growing demand and the optimism surrounding artificial intelligence (AI), especially generative AI. Inflationary pressures were one of the primary reasons behind slowing demand in the early part of 2024.
However, pressures have eased with inflation showing signs of cooling. The Semiconductor Industry Association (SIA) said on Jul 5 that global semiconductor sales totaled $49.1 billion in May, increasing 19.3% year over year. Sequentially, sales jumped 4.1% from April’s total of $47.2 billion.
John Neuffer, SIA president and CEO, said, “The global semiconductor market has grown on a year-to-year basis during each month of 2024, and year-to-year sales in May increased by the largest percentage since April 2022.”
Neuffer added, “The Americas market experienced particularly strong growth, with a year-to-year sales increase of 43.6%.”
Inflation has finally started showing signs of a decline. Easing price pressures have led to a rebound in demand.
Also, the ongoing enthusiasm surrounding AI has been helping companies that manufacture AI chipsets.
NVIDIA Corporation NVDA has been at the heart of this revolution, with the company’s shares gaining 154.1% year to date and 196.7% in the past year.
NVIDIA's rally is being fueled by its graphics processing units. Also, widespread adoption of the Internet and other digital technologies have boosted demand for AI chipsets over the past few years, and the trend is likely to continue over the long term.
Our Picks
Given the promising future, it would be wise to invest in semiconductor stocks like NVIDIA Corporation, Taiwan Semiconductor Manufacturing Company Limited TSM,Micron Technology, Inc. MU and RF Industries, Ltd. RFIL, which investors can gain from in the near term.
NVIDIA Corporation is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit, or GPU. Over the years, NVDA’s focus has evolved from PC graphics to AI-based solutions that now support high-performance computing, gaming and virtual reality platforms.
NVIDIA has an expected earnings growth rate of 106.2% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.1% over the last 30 days. NVDA presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Taiwan Semiconductor Manufacturing Company Limited is the world's largest dedicated integrated circuit foundry. As a foundry, TSM manufactures ICs for its customers based on their proprietary IC designs using its advanced production processes. Taiwan Semiconductor Manufacturing Company Limited’s goal is to establish itself as one of the world's leading semiconductor companies by building upon the strengths that have made it the leading IC foundry in the world.