The emergence of generative artificial intelligence (AI) in 2023 led to a surge in activity among semiconductor companies. NVIDIA, in particular, saw its stock price quadruple in value over the past year as a key player in the AI industry. However, investors looking to capitalize on the semiconductor industry may want to explore other options beyond NVIDIA. Here are three undervalued semiconductor stocks to consider in June 2024:
1. Taiwan Semiconductor Manufacturing Company (TSM):
TSM is one of the largest chip manufacturers globally, producing chips for companies like NVIDIA, Apple, and AMD. The company reported significant profit growth in recent quarters, driven by strong demand for AI chips. With its ability to produce chips using a 3-nanometer process and plans to introduce 2-nanometer production by 2024, TSM is well-positioned to meet the growing demand for AI chips. Trading at 26.5 times forward earnings, TSM appears undervalued and offers a promising long-term investment opportunity.
2. Broadcom (AVGO):
Broadcom specializes in designing and selling microchips for data processing on networks. The rise of data centers and cloud networks has increased demand for fast optical interconnects and network chips to support AI models. Broadcom also designs custom AI chips for customers, with Google being a major client. The company is expected to sell around $10 billion worth of AI chips in 2024, making it a compelling choice for investors looking to capitalize on the AI chip market.
3. ACM Research (ACMR):
ACM Research provides equipment for semiconductor foundries to improve chip performance during the manufacturing process. The company reported a 105% year-over-year increase in revenue for fiscal 2024, driven by higher sales of core products. With a focus on serving mainland Chinese customers and strong growth opportunities in East Asia, ACMR offers an undervalued investment option. Trading at just 14.3 times forward earnings, the company is well-positioned for future growth in the semiconductor industry.
Overall, these undervalued semiconductor stocks present exciting opportunities for investors to capitalize on the evolving technology sector, specifically the demand for AI chips. Considering the growth potential and market position of these companies, they are worth exploring for long-term investment strategies.
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https://investorplace.com/2024/06/the-3-most-undervalued-semiconductor-stocks-to-buy-in-june-2024/