A New Era of Growth for Semiconductor Stocks
The stock market has experienced a wild ride this year, with the semiconductor industry being a mixed bag for investors. While some artificial intelligence (AI) winners have shone bright, others have struggled to keep up. However, 2025 is poised to bring broader growth to the chip sector, and analysts are predicting double-digit returns for many associated stocks.
The Rise of Nvidia
Nvidia Corp., the leading provider of graphics processing units (GPUs) for data centers supporting AI development, has been a standout performer. The company’s stock has returned an astonishing 183% this year, following a 239% return in 2023. This incredible growth comes after a 50% decline in 2022, serving as a reminder of the importance of patience in the stock market. Nvidia’s stock has returned a staggering 378% since the end of 2021.
Industry-Wide Growth Expected
While Nvidia has dominated the headlines, other chip players are expected to experience significant growth in 2025. Marvell Technology Inc., for instance, is projected to see revenue surge nearly 36% next year, while Texas Instruments Inc. is expected to log an 11.5% sales growth. Companies exposed to troubled areas such as analog, industrial, and automotive markets will benefit from easier comparisons in the new year, and business conditions are expected to improve in some pockets.
Screening the Semiconductor Industry
A broad screen of the semiconductor industry revealed 10 companies expected to increase sales the most in 2025. Nvidia tops the list, with analysts expecting revenue to grow nearly 55% next year. Other top performers include Micron Technology Inc., Silicon Laboratories Inc., and Marvell Technology Inc.
Analysts’ Favorite Stocks
Another screen focused on analysts’ opinions of the stocks themselves. Ten semiconductor stocks with “buy” ratings from at least 85% of analysts polled by FactSet also have double-digit price increases expected. These include Micron Technology Inc., Onto Innovation Inc., Impinj Inc., and Nvidia Corp. Many of these favored names saw big gains in 2024, and analysts expect them to continue outperforming in 2025.
A Bright Future Ahead
The potential for upside in many pockets of the chip universe could be a comfort to investors disappointed by the performance of the broader sector this year. With analysts predicting strong growth and double-digit returns, 2025 is shaping up to be a promising year for semiconductor stocks.
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