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One of the greatest beneficiaries of the artificial intelligence (AI) megatrend has undoubtedly been Nvidia (NVDA). Trading under $5 per share just five years ago, the stock has rallied about 3,000% in the intervening period, and recently took its turn as the world's most valuable company by market cap. So far in 2024, NVDA has continued its relentless run higher, rising 158.6% on a YTD basis.
However, Nvidia shares stumbled in late June, with some investors taking profits after the stock's 10-for-1 split and subsequent surge to new highs. And in today's session, NVDA is in focus again, trading fractionally lower after New Street Research downgraded the stock to “Neutral” from “Buy” on valuation concerns.
As a result, there are some rival large-cap semiconductor stocks that significantly outperformed Nvidia's 12.69% return for the month of June. Here's a closer look at these market leaders as we head into the third quarter.
#1. Taiwan Semiconductor
Founded in 1987, Taiwan Semiconductor (TSM) is the world's largest dedicated semiconductor foundry, meaning it manufactures the chips designed by Nvidia and others. That means TSM is a vital part of the global chip supply chain. The company is known for its constant investment in research and development, ensuring it stays at the forefront of chip manufacturing technology. Its market cap currently stands at a mammoth $946.47 billion.
TSM stock rose by 15% in June, and is up 77% on a YTD basis. The stock also offers a dividend yield of 0.88%.
Overall, analysts have an average rating of “Strong Buy” for TSM. Out of 10 analysts covering the stock, 8 have a “Strong Buy” rating, 1 has a “Moderate Buy” rating, and 1 has a “Hold” rating.
Taiwan Semi stock is trading above its mean target price of $180.86, but the Street-high target price of $218 indicates an upside potential of about 18% from current levels.
#2. Skyworks Solutions
Based out Irvine, CA, Skyworks Solutions (SWKS) designs and manufactures innovative analog semiconductors that are essential for wireless connectivity. Their products include power amplifiers, filters, switches, and integrated modules used in smartphones, tablets, wearables, routers, and other connected devices. The company's market cap currently stands at $16.7 billion.
SWKS stock matched Taiwan Semi with a gain of 15% in June, though the shares are down 6.2% on a YTD basis. Notably, the stock offers a dividend yield of 2.6%.
Analysts have deemed Skyworks stock a “Hold” overall. Out of 25 analysts covering the stock, 6 have a “Strong Buy” rating, 17 have a “Hold” rating, 1 has a “Moderate Sell” rating, and 1 has a “Strong Sell” rating.
SWKS is trading at a modest premium to its average analyst price target of $102.41, while the Street-high target price is $130. This indicates an upside potential of roughly 23.1% from current levels.
#3. Qorvo
Founded in 2015 and based out of Greensboro, North Carolina, Qorvo (QRVO) designs and manufactures radio frequency (RF) components and solutions for mobile, infrastructure and aerospace/defense, and consumer electronics applications. Their products include filters, amplifiers, modules, and integrated circuits (ICs) that enable wireless connectivity in various devices. Its market cap is currently $11.2 billion.
QRVO stock rallied 17% in June, and is now up 5.5% on a YTD basis.
Overall, analysts have a consensus rating of “Hold” for QRVO stock, which trades above its mean price target of $109.90. The shares have room to run about 8.2% higher to the Street-high target of $135.
Out of 23 analysts covering Qorvo, 5 have a “Strong Buy” rating, 2 have a “Moderate Buy” rating, 13 have a “Hold” rating, 1 has a “Moderate Sell” rating, and 2 have a “Strong Sell” rating.
#4. Broadcom
Founded in 1991 and based out of San Jose, Broadcom (AVGO) is one of the leading semiconductor companies in the world. They design, develop and supply a wide range of analog and digital integrated circuits and other related products. In other words, they make the tiny chips that power many of our electronic devices, and also develop software for data center networking. The company currently commands a massive market cap of $804.9 billion.
AVGO stock delivered an impressive performance in June, rising 21%. Broadcom shares are up 53.2% on a YTD basis, and offer a dividend yield of 1.21%.
Earlier this week, Broadcom caught a boost when it was reported that Rep. Nancy Pelosi (D-CA) bought 20 call options on the chip stock with a strike price of $800 set to expire next June.
On Wall Street, analysts have deemed AVGO stock a “Strong Buy,” with a mean target price of $1,828.30, which indicates an upside potential of about 7% from current levels.
Out of 31 analysts covering the stock, 28 have a “Strong Buy” rating, and 3 have a “Hold” rating.
#5. Arm Holdings
We conclude our list with Arm Holdings (ARM). The UK-based company doesn't manufacture chips; instead, they design the architecture and instruction sets that form the core of processors used in smartphones, tablets, wearables, and other electronic devices. They license these designs and technologies to other companies who then manufacture and integrate them into their products. Its market cap currently stands at $176.29 billion.
ARM stock zoomed 35% higher in June, and has gained a staggering 137.8% on a YTD basis.
Overall, analysts have a consensus rating of “Moderate Buy” for ARM stock. Out of 23 analysts covering the stock, 14 have a “Strong Buy” rating, 8 have a “Hold” rating, and 1 has a “Strong Sell” rating.
ARM has long since surpassed its average price target of $118.09, and is on track to end this week in line with its Street-high target price of $180.
