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Over the previous year, the world of semiconductors has shaken up, spearheaded by the likes of Nvidia (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD). These chips are the unseen engines propelling today’s technology, from our smartphones and electric vehicles to the cavernous data centers. A swelling wave of artificial intelligence (AI) has driven this frenzied demand for semiconductors, as tech giants worldwide integrate AI into their offerings.
This surge has led to a scramble, with companies struggling to meet the insatiable hunger for powerful chips like graphics processing units (GPUs). Our focus now shifts to three semiconductor stocks poised to ride this wave of success into April.
Micron Technology (MU)
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Micron Technology (NASDAQ:MU), an American semiconductor stalwart established in 1978, specializes in crafting dynamic random access memory (DRAM) chips. Analysts tout an average price target of $121.00, aligned with current prices. Recent upgrades are pushing the Street-high target to $200.00 per share. With a recent surge breaching resistance levels on the crest of robust earnings and optimistic guidance stretching to 2025, Micron’s chips are basking in the glow of the AI revolution, boosting margins and returning the company to profitability.
Despite trading at around 7x sales – a reasonable valuation in the semiconductor sphere – Micron’s recent revenue resurgence has reshaped earnings multiples, steering the revenue compound annual growth rate (CAGR) back on course. The recent quarter saw a 58% year-over-year revenue spike, poised to catapult to 75% in the ensuing quarter, a far cry from the former -9.0% five-year revenue CAGR pre-AI surge.
Broadcom (AVGO)
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Broadcom (NASDAQ:AVGO), an American semiconductor and infrastructure software juggernaut dating back to 1961, finds favor among 27 of 29 analysts as a Buy or Strong Buy. Sporting an average price target of $1,393.62, a hair above its current price, Broadcom focuses on crafting application-specific integrated circuits (ASICs), custom chips tailor-made for diverse needs. Despite sailing in the swell of Nvidia and AMD’s successes, Broadcom faces headwinds due to dwindling hardware segment sales.
Trading at 28x forward earnings and 14x sales, Broadcom, ostensibly pricy, boasts a solid five-year revenue CAGR of 13%, poised to escalate as the company pivots towards custom AI chips.
Marvell Technology (MRVL)
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Marvell Technology (NASDAQ:MRVL), a Delaware-based semiconductor outfit specializing in ASICs for data centers and beyond, sits below the lowest analyst price target of $71.00 and around 30% shy of the loftiest $100.00 target. The median target of $88.33 hints at a 20% upward trajectory indicative of the firm’s resilience.
Basking in the AI industry tailwinds, Marvell, a purveyor of data centers and custom chips pivotal for AI, forecasts double-digit top-line revenue growth till the fiscal year 2026, a marked upturn from pre-AI days.
Evoking a slight premium compared to its peers, Marvell trades at approximately 47x forward earnings and 11x sales. As revenue anticipates a bullish upsurge, these multiples may either retrace or act as a launchpad for Marvell’s market cap and share prices, steering the company on an upward trajectory.
On the article’s publication date, Ian Hartana and Vayun Chugh held no positions (directly or indirectly) in the securities discussed. The viewpoints expressed herein are that of the writer and adhere to InvestorPlace.com Publishing Guidelines.
Chandler Capital represents the endeavours of Ian Hartana and Vayun Chugh, both self-taught investors with their work featured in Seeking Alpha. Their research delves into GARP stocks with a long-term investment vista encompassing sectors like technology, energy, and healthcare.
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