The era of artificial intelligence (AI) is upon us, and at the forefront of this technological revolution stands the semiconductor industry. These chipmakers serve as the backbone for AI’s computational and data handling capabilities. With the projected growth of the semiconductor market to a staggering $1.14 trillion by 2033 at a rate of 7.6% annually, the future looks exceptionally bright for AI-focused semiconductor stocks.
Leading the GPU chip market charge is Nvidia Corp (NVDA), a behemoth worth over $1.9 trillion. With shares soaring by 60% year-to-date and a remarkable 193% in the past 52 weeks, Nvidia has gained significant attention. Despite concerns surrounding a potential “AI bubble” due to its soaring stock price, Evercore ISI Group’s Mark Lipacis recently bestowed an “Outperform” rating on Nvidia, aligning with the optimistic sentiment on Wall Street.
Microchip Technology: A Rising Star in AI Semiconductor Stocks
One notable player in the AI semiconductor arena is Microchip Technology Incorporated (MCHP). Situated in Chandler, Arizona, the company specializes in creating smart, connected, and secure embedded control solutions. Serving diverse industries such as industrial, automotive, aerospace, defense, communications, and computing, Microchip Technology boasts a market cap of $44.1 billion.
With shares climbing by 9.7% over the past year, Microchip Technology offers an annualized dividend of $1.68, translating to a 2.06% dividend yield. Highly regarded for its comprehensive product lineup, the company’s recent fiscal Q3 earnings exceeded Wall Street expectations, reflecting its robust performance and market competitiveness.
NXP Semiconductors Shining Bright in the Semiconductor Space
Hailing from Eindhoven, Netherlands, NXP Semiconductors N.V. (NXPI) commands a significant presence in the semiconductor domain. Offering a wide array of products including microcontrollers, communication processors, and wireless solutions, NXP Semiconductors caters to various applications ranging from automotive to Internet of Things (IoT). With a market capitalization of $55.1 billion, the company has witnessed a notable stock surge of 29.4% over the past year, surpassing broader market indices.
While dividend yields remain strong at 1.89%, NXP Semiconductors reported solid Q4 results in line with expectations. The company’s revenue growth to $3.4 billion showcased resilience in key market segments, particularly automotive and industrial & IoT, laying a strong foundation for future growth.
Unveiling the Rising Stars in the Semiconductor Industry
Exploring NXP Semiconductors’ Financial Prospects
NXP Semiconductors, a powerhouse in the semiconductor industry, forecasts revenues between $3.025 and $3.225 billion. The non-GAAP earnings are anticipated to be between $2.97 and $3.38 per share. Analysts foresee the company’s EPS softening in fiscal 2024 to $12.28 before bouncing back with a 14.6% year-over-year growth to $14.07 in fiscal 2025.
With a consensus “Moderate Buy” rating overall, NXP Semiconductors has been attracting attention. Out of the 25 analysts covering the stock, 13 recommend a “Strong Buy,” two suggest a “Moderate Buy,” while nine urge a “Hold” rating, and one goes for a “Strong Sell.”
The average analyst price target for NXP Semiconductors sits at $244.62, pointing towards an 11.4% potential upside. The Street-high target price of $300, as assigned by Evercore recently, indicates a staggering 36.7% upside potential.
Unveiling Impinj’s Path to Success
Impinj, Inc., based in Seattle with a market cap of $3.2 billion, shines as a chip-producing company specializing in innovative radio frequency identification (RFID) chip solutions. These solutions ingeniously connect products like shipments, vehicles, and luggage to the internet wirelessly through RFID chips.
Impinj’s shares have surged by an impressive 33% year-to-date, surpassing both SPX’s 5.9% returns and XSD’s 7.7% decline. Trading at 10.98 times sales, the stock appears to be priced at a premium compared to most of its RFID competitors.
In its recent Q4 earnings report, Impinj exceeded expectations with a non-GAAP net income of $2.5 million, equivalent to $0.09 per share, on revenue amounting to $70.7 million. The company’s cash and cash equivalents soared a remarkable 383.7% year over year to $94.8 million as of Dec. 31.
Looking ahead, Impinj is gearing up to announce its fiscal Q1 2024 results this Wednesday. The company projects a quarterly revenue range of $72 million to $75 million. The non-GAAP net income per share is estimated to fall between $0.08 and $0.13. Analysts tracking Impinj anticipate its GAAP losses to dwindle to $0.62 per share in fiscal 2024 before turning profitable with $0.31 per share in fiscal 2025.
The average analyst price target for Impinj stands at $128.22, suggesting a potential upside of 6.6%. A Street-high target price of $160, set by Evercore, hints at a roughly 33% upside potential.
Impinj, with a consensus “Strong Buy” rating, has been identified as a key player in the Internet of Things (IoT). Analysts foresee the company benefitting from the thriving IoT market. There are expectations of substantial growth in operational margins, potentially increasing by 2,500 basis points over the next decade, which could significantly enhance profitability in a market with low RAIN RFID technology penetration. The confluence of industry consolidation and semiconductor market cycles also bodes well for the company’s future performance.