10 Top Semiconductor Stocks: These Chipmakers Are the Best Stocks in the Semiconductor Industry

This article includes links which we may receive compensation for if you click, at no cost to you.

Semiconductors are the foundation of billions of products worldwide and these growth stocks are successfully tapping into this massive market.

Semiconductor stocks have received a lot of attention in 2021, mostly because there’s a massive shortage of chips thanks to the coronavirus pandemic, major weather events, increasing political tensions between the United States and China, and a spike in demand for consumer devices during lockdowns.

But all of this demand for chips—which are used in everything from cars to washing machines—proves just how important the chip industry is and why investors should consider adding a few top semiconductor stocks to their portfolio. 

The tech stocks listed here are tapping into the fast-growing semiconductor market that will grow by 77% over the next seven years—topping $800 billion by 2028!

This is creating an incredible opportunity for investors as products of all kinds incorporate more technology. Let’s take a closer look at some top semiconductor stocks that could be fantastic investments in the coming years. 

Top 10 Semiconductor Stocks

  1. Taiwan Semiconductor Manufacturing Company
  2. NVIDIA Corporation 
  3. Qualcomm 
  4. Advanced Micro Devices 
  5. Apple 
  6. NXP Semiconductors N.V.
  7. Broadcom
  8. ASML Holding N.V. 
  9. Applied Materials Inc. 
  10.  Lam Research 

Taiwan Semiconductor Manufacturing Company (NYSE: TSM)

Taiwan Semiconductor Manufacturing (NYSE:TSM)
Price: $602 (as of close Jun 14, 2021)

Let’s start this semiconductor stock list with Taiwan Semiconductor Manufacturing, which is one of the leading chip manufacturers in the world. 

Investors should know that some companies just design their own chips—called a “fabless” chip company—while others, like Taiwan Semiconductor, actually make the chips. And, boy do they make a lot of chips! The company says it produces nearly 12,000 products and manufactures them for more than 500 companies.

The company had a tremendous year in 2020, as sales climbed more than 25% and earnings increased by 50% compared to 2019. This is particularly impressive when you consider that Taiwan Semiconductor is a massive company with a market cap of $563 billion

But wait, there’s more! The ongoing chip demand, which won’t subside even when the shortage is over, is causing the company to see dollar signs. Taiwan Semiconductor’s management is investing $100 billion to expand its chip manufacturing over the next three years.

If you think companies with huge market caps are sluggish and out of their prime, consider that Taiwan Semiconductor’s stock has surged more than 370% over the past five years. 

NVIDIA Corporation (Nasdaq: NVDA) 

Price: $720.75 (as of close Jun 14, 2021)

NVIDIA has hands-down been one of the best semiconductor stocks on the market as the company’s share price has surged more than 1,350% over the past five years (not a typo).

Ok NVIDIA, but what have you done for investors lately? The company answers that question by continually finding new ways to utilize its top-shelf graphics processing units (GPUs) beyond the company’s core business, which is selling GPUs for gaming.  

Consider these massive trends that NVIDIA is tapping into:

  • Custom GPUs for cryptocurrency mining
  • Tech companies incorporating NVIDIA’s GPUs into their artificial intelligence (AI) data centers
  • Its chips are helping to power 5G data centers 
  • Its GPUs are being used for onboard driverless cars systems 

Any company can claim they’re riding important tech trends, but NVIDIA actually delivers on its opportunities. Revenue spiked 53% in 2020 and sales from the company’s data center segment—NVIDIA’s second largest sales segment—skyrocketed 124%

If you’re looking for one of the most innovative, well-run semiconductor companies in the industry delivering massive returns for investors and tapping into huge tech trends, NVIDIA is a no-brainer semiconductor stock. 

Qualcomm (Nasdaq: QCOM)

Qualcomm (NASDAQ:QCOM)
Price: $137.31 (as of close Jun 14, 2021)

Qualcomm may be one of the most important chip companies of the past two decades that many people have never heard of. It was Qualcomm’s cellular chips that helped spark the cellphone—and then smartphone—revolution with its 3G and 4G technologies. 

The company amassed a huge treasure trove of 3G and 4G patents, which allowed the company to rake in massive amounts of royalties for its intellectual property (IP) when those devices started selling like hotcakes.

The company may not have the margins it once did with its IP, but that doesn’t mean Qualcomm won’t benefit from the rise of 5G. 

Qualcomm already has more than 110 5G agreements with smartphone makers and those will come in handy when the amount of 5G mobile subscriptions surges more than 3,000% between now and 2025. 

Qualcomm’s share price has seen some volatility over the past few years, especially when the company was fighting Apple in the courtroom. But most of that drama is in the past and the company’s stock has put up solid returns of 143% over the past five years. 

Advanced Micro Devices (Nasdaq: AMD)

Advanced Micro Devices (NASDAQ:AMD)
Price: $81.55 (as of close Jun 14, 2021)

If you played video games on a gaming console any time over the past decade, then you already know the power of AMD’s semiconductors. 

One of the company’s core revenue segments is its EESC (enterprise, embedded, and semi-custom) business, which sells chips to Sony (SONY) for its PlayStation consoles and to Microsoft (MSFT) for its Xbox gaming system. Sales in this segment spiked 66% in 2020 and more good news could be on the way. 

Both Sony and Microsoft only just recently launched new versions of their gaming consoles, which will bring many years’ worth of chips sales for AMD. 

But that’s now AMD’s only play in the chip market. The company makes most of its revenue from its Computing and Graphics segment, which grew 37% in 2020. And there’s likely more where that came from. It’s no secret that Intel (INTC) has been slipping in the chip market over the past few years and AMD has been more than happy to pick up the slack. 

Recent data shows that AMD’s x86 CPUs—central processing units (CPUs) used in desktop computers—now have nearly 40% of the market (double what it was in 2017), while Intel’s share has plunged by 25%. In simpler terms, AMD has surpassed Intel and is now the top desktop semiconductor company. 

Where to invest $500 right now

Before you buy Amazon, or Netflix, or Apple, consider this...

The team at Motley Fool first recommended each of those stocks more than a dozen years ago!

  • They discovered Netflix for $1.85 per share, back in the days of DVDs by mail.
  • And recommended Amazon at $15.31 in 2002, before most people were comfortable using credit cards online.
  • And even hit Apple at $4.97 per share, about a month before the release of the very first iPhone.

Check out where those stocks are today. The bottom line: a $500 investment in all three of these stocks would be worth more than $200,000 today!

And here’s why that’s important: The Motley Fool’s flagship investing service Stock Advisor just announced their top 10 “best buys now” across the entire stock market. Whether you’re starting with $100, $500, or more, you’ll want to get the full details!

Click here to learn more

Apple (Nasdaq: AAPL) 

Price: $130.48 (as of close Jun 14, 2021)

Many investors may find the fact that Apple is on this list of semiconductor stocks a bit odd. But Apple has made at least two significant moves over the past few years that earn this tech stalwart a spot among the top semiconductor stocks out there right now. 

Apple designs its own chips for its mobile devices, something the company has been doing for years. Its iPhones and iPads have Apple-designed chips for which the company outsources the manufacturing. 

But Apple made a huge announcement in 2020 when the company said it would start using its own chips in Mac computers as well. The company’s M1 chips are now in some of the company’s newest Macbook notebooks and its iMac desktops. 

Why does this matter? Because Apple is a massive chip buyer and when it makes a decision to design its own chips it affects much of the semiconductor industry. 

For example, Apple’s Macs account for about 8% of the global PC market and when it announced it was designing its own chips this was terrible news for Intel, which was a key chip supplier to Apple for both notebooks and desktops. 

In addition to its current self-designed chips, Apple also bought Intel’s 5G chip business back in 2019 and is working on its own cellular baseband chips (the ones that send cellular signals to towers). The timeline is still unclear, but Apple could have its own 5G chips in iPhones in the next two years, potentially taking away some of Qualcomm’s modem chip business.

NXP Semiconductors N.V. (Nasdaq: NXPI)

NXP Semiconductors (NASDAQ:NXPI)
Price: $203.57 (as of close Jun 14, 2021)

Most of the companies on this list are either fabless semiconductor companies or manufacturing companies, but most aren’t both

NXP Semiconductors makes its own chips and can be contracted out by other companies to make their chips—and it’s tapping into some very big tech trends. 

As the largest automotive chipmaker, NXP’s biggest opportunity is in the automotive tech sector. The company makes about 44% of its total revenue by making chips for the automotive industry, including for autonomous vehicles, electric vehicles, and advanced driver assistance systems (ADAS). 

Why does that matter? Because nearly all new cars have at least one ADAS feature (like automatic brakes); over the next 30 years, EVs will account for 50% of all new cars sold; and an estimated 58 million vehicles could be self-driving by 2030. 

Not only will NXP benefit from all of these trends, but its chips are used in many Internet of Things (IoT) devices for automated factories, and its near-field communication (NFC) chips allow for quick, wireless payments from mobile devices. 

I told you the company was betting on some big tech trends! 

NXP’s stock hasn’t been as successful as some other companies, but their ability to tap into these fast-growing trends provides lots of potential upside in the coming years. 

Broadcom (Nasdaq: AVGO)

Broadcom Ltd (NASDAQ:AVGO)
Price: $475.83 (as of close Jun 14, 2021)

Broadcom makes the majority of its revenue from wireless chips—like Bluetooth, WiFi, and cellular—and the company is perfectly poised to benefit from the industry’s transition to 5G.

The company is a key supplier of none other than Apple, which sells tens of millions of iPhones and iPads every year. In the same way that Apple will benefit as consumers upgrade their 4G LTE phones to 5G-enabled phones, Broadcom will benefit as well. 

The good news for the company (and investors) is that it’ll take years for 5G devices to become the norm, which means Broadcom will be able to benefit from many years’ worth of chip orders from Apple and other companies. 

Adding to Broadcom’s 5G opportunity is the fact that the company also has another strong business as well, like providing connectivity chips for data centers. As companies move more of their data to the cloud and rely on data centers to power their software and services in the coming years, Broadcom’s data center connectivity chip business should benefit. 

If all of that isn’t enticing enough, investors should also consider that Broadcom pays a dividend with a substantial 3% yield. 

ASML Holding N.V. (Nasdaq: ASML) 

Price: $577.7 (as of close Jun 14, 2021)

One aspect of the semiconductor industry we haven’t covered yet, but that’s hugely important to the sector, is chip manufacturing equipment (who knew how multifaceted advanced technology could be?), and no company is more important in this space than ASML Holdings. 

ASML makes chip fabrication equipment and software, in addition to servicing the equipment for its clients. The company is a leading supplier of this technology to Taiwan Semiconductor, Samsung, and Intel—the largest chip manufacturers in the world. 

I wrote earlier about Taiwan Semiconductor spending $100 billion over the next three years to expand its chip production. And where do you think some of that spending is going? That’s right: ASML. 

But it’s not just Taiwan Semiconductor that’s ramping up production. Semiconductors are in high demand and increasingly finding their way into more and more products and devices, which means that ASML’s equipment and services have plenty of room to grow. 

ASML’s stock has solidly beat the market over the past three years, with its share price climbing 230%, compared to the S&P 500’s 53% increase. And with chip demand soaring, ASML is poised to see even more growth in the coming years.  

Applied Materials Inc. (Nasdaq: AMAT) 

Applied Materials (NASDAQ:AMAT)
Price: $139.03 (as of close Jun 14, 2021)

Just like ASML Holdings, Applied Materials is a provider of chip manufacturing equipment and software services to semiconductor manufacturers. 

This means that Applied Materials will benefit in much the same way that ASML will as demand for more chips continues. Consider that in 2020 the company’s revenue jumped 18% and adjusted earnings spiked by 38% from the previous year. 

And the coming years could be even better. As chip demand increases for everything from cars to data centers, Applied Materials’ manufacturing equipment should see increased demand as well. 

The company’s management said on an earnings call recently that the chip manufacturing is shifting away from its just-in-time production—where chips are only produced to fill current orders and not kept in large supply—because of the recent chip shortage.

“Current capacity shortfalls in some areas of the market show the highly efficient, just-in-time supply chains that have served the semiconductor industry well for the past two decades may not be the most effective strategy going forward,” Applied Materials CEO Gary Dickerson said. 

As companies shift to producing more chips, you can bet the need for chip manufacturing will spike as well.

Lam Research (Nasdaq: LRCX) 

Lam Research (NASDAQ:LRCX)
Price: $650.24 (as of close Jun 14, 2021)

And finally, there’s Lam Research. This company truly gets into the nitty-gritty details of semiconductor manufacturing. It’s worth taking a look at exactly what the company does. 

Lam helps semiconductor manufacturers produce chips with the company’s highly technical etching and depository systems. Before your eyes glaze over in boredom, just know that the most advanced chips need to be constructed with high precision and can consist of 100 layers or more of thin, conductive martial. 

And nearly no other company does this better than Lam. Some of the most advanced semiconductors rely on Lam’s equipment and as demand for more high-end chips increases it’s likely that Lam’s technical know-how will come in handy. 

Consider that the company’s management said on a recent earnings call that, “In 2020, we gained share across both etch and deposition, including significant gains in conductor etch. We expect to deliver overall share growth again in 2021.” 

While the company’s share price can sometimes ebb and flow with chip demand, the stock’s long-term trajectory speaks for itself. Over the past three years, Lam Research’s share price has jumped 214%. 

Semiconductor ETFs: Invest in a Basket of Top Semiconductor Stocks All At Once

If perusing the stock market for one semiconductor stock isn’t your idea of a good time, you may want to consider investing in a semiconductor exchange-traded fund (ETF). 

A semiconductor ETF will give you exposure to many chip stocks all at once, allowing you to benefit from the market’s overall growth.

Two such ETFs with impressive performance are the iShares PHLX Semiconductor ETF (SOXX) and the VanEck Vectors Semiconductor ETF (SMH). Over the past five years, the iShares PHLX Semiconductor ETF has gained more than 350% and the VanEck Vectors ETF has gained more than 330%—both beating the S&P 500’s returns by more than 3X! 

Frequently Asked Questions 

What is the best semiconductor stock?

The companies listed here are some of the top semiconductor stocks available to investors. Two of the top-performing stocks on this list are NVIDIA Corporation and Advanced Micro Devices, which have gained 1,360% and 1,800%, respectively, over the past five years. 

What are top automotive semiconductor stocks?

NXP Semiconductors N.V. is one of the leading suppliers of semiconductors for automobiles. 

Where to invest $500 right now

Before you buy Amazon, or Netflix, or Apple, consider this...

The team at Motley Fool first recommended each of those stocks more than a dozen years ago!

  • They discovered Netflix for $1.85 per share, back in the days of DVDs by mail.
  • And recommended Amazon at $15.31 in 2002, before most people were comfortable using credit cards online.
  • And even hit Apple at $4.97 per share, about a month before the release of the very first iPhone.

Check out where those stocks are today. The bottom line: a $500 investment in all three of these stocks would be worth more than $200,000 today!

And here’s why that’s important: The Motley Fool’s flagship investing service Stock Advisor just announced their top 10 “best buys now” across the entire stock market. Whether you’re starting with $100, $500, or more, you’ll want to get the full details!

Click here to learn more

Chris Neiger owns shares of Apple. The Motley Fool owns shares of and recommends Apple, Lam Research, NVIDIA, Qualcomm, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends ASML Holding, Applied Materials, Broadcom Ltd, and NXP Semiconductors and recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. Millennial Money is part of The Motley Fool network. Millennial Money has a disclosure policy.

Leave a Reply

Your email address will not be published. Required fields are marked *

In This Article