2 Super Semiconductor Stocks to Buy, According to Wall Street

Nvidia (Nasdaq: NVDA) He is a role model for the artificial intelligence (AI) revolution. The company is worth $2.2 trillion as of this writing, with $1.5 trillion of that value added in the past 12 months alone. Nvidia's recent success is epitomized by its data center chips designed to handle AI workloads, which continue to attract impressive demand.

But despite capturing the lion's share of investor attention, Nvidia isn't the only opportunity in the semiconductor space. according to The Wall Street JournalAnalysts have a consensus on the overweight (bullish) classification on two other names: Advanced micro devices (NASDAQ:AMD) And Accelis Technologies (NASDAQ: ACLS).

That's why owning AMD and Axcelis stock might be a great idea, too.

1. AMD is emerging as a competitor to Nvidia in data centers

AMD chips power some of the world's most popular consumer electronics, including… Sonyplaystation 5, MicrosoftXbox Series TeslaElectric cars. However, investors' attention is now focused on the data center.

The company has begun shipping its latest MI300 lineup of data center chips designed specifically for it Artificial intelligence workloads – Hardware that competes with Nvidia's industry-leading H100 graphics processing unit (GPU). The MI300 comes in two configurations: The MI300A combines a GPU and CPU to create an Accelerated Processing Unit (APU), while the MI300X is a pure GPU.

The MI300A has been selected by Lawrence Livermore National Laboratory to power its new El Capitan supercomputer, which is expected to be the world's fastest when it goes online this year. However, AMD is also seeing strong commercial demand for the MI300 range from leading data center operators such as… inspirationAnd Microsoft and Meta platforms.

The MI300 will likely drive AMD's data center revenues higher in the next few years. It won't be easy to catch him Nvidia In this part. However, AMD has a 90% market share in AI-enabled PCs. The Ryzen 700 (Ryzen AI) series chips are designed to handle powerful on-device AI workloads, resulting in faster end-user response times because requests aren't traveling back and forth to the data center.

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Millions of computers from leading companies such as Dale, HPAnd Asus (Among other things) it already shipped with a Ryzen AI chipset. In Q4 2023, Ryzen AI chips drove AMD's customer segment revenue 62% year over year. The company is planning to launch a new processor, which is up to three times faster than previous iterations, so this work is in the preparation phase.

Combined with the expected $3.5 billion revenue contribution from the MI300 series in its first full year of sales, 2024 is set to be AMD's biggest year yet. Not surprisingly, the majority of the 50 analysts are tracked The Wall Street Journal I gave AMD shares the highest possible buy rating.

2. Axcelis technologies are an important part of the chip manufacturing process

Axcelis Technologies is not a glamorous GPU producer like Nvidia or AMD. In fact, it is relatively overlooked, with The Wall Street Journal It follows only eight analysts covering its shares. However, the majority of them gave it the highest possible buy rating, and it is trading at a very attractive valuation at the moment, which could tempt investors to follow the Street's lead.

Axcelis makes equipment for ion implantation, which is critical to the chip manufacturing process. Producers of silicon carbide power devices – which regulate electrical power in high-current workloads – are a significant source of demand for Axcelis at the moment, thanks in particular to the electric vehicle industry. Silicon carbide chemistry is more efficient than traditional silicon chemistry, resulting in greater mileage per battery charge and faster charging times.

The company is also preparing for increased demand from AI-related semiconductor producers. Last year, the company noted that AI requires much more memory and storage capacity, which could make manufacturing DRAM and NAND chips more complex and more expensive.

Axcelis generated record revenues of $1.13 billion during 2023, representing a 22.9% year-over-year increase. But here's the kicker: The company ended 2023 with an order backlog of $1.2 billion, so 2024 is shaping up to be another record year.

The stock is up more than 400% in the past five years, but took a break over the past few months, suffering a 44% decline from its all-time high. This could lead to an opportunity, because based on the company's earnings per share of $7.43 in 2023, the stock now trades at a price-to-earnings (P/E) ratio of just 14.6. This represents a 59% discount to its P/E ratio of 35.6 iShares Semiconductor ETFso Axcelis stock is much cheaper than the rest of the chipmakers, on average.

Furthermore, when you also consider Wall Street's bullish stance on Axcelis stock, there's a very clear case to buy it now.

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Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Anthony Di Bizzio He has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, HP, Meta Platforms, Microsoft, Nvidia, Oracle, and Tesla. The Motley Fool recommends the following options: long $395 January 2026 calls on Microsoft and short $405 January 2026 calls on Microsoft. The Motley Fool has Disclosure policy.

Forget Nvidia: 2 Super Semiconductor Stocks to Buy, According to Wall Street Originally published by The Motley Fool