10 Best Semiconductor Stocks According to Billionaires

In this article, we discuss the 10 best semiconductor stocks according to billionaires.

The semiconductor industry is arguably one of the most important segments of the market. It is the backbone of our modern digital era. Our society’s dependence on electronic devices and interconnected systems increases day by day, and due to that, the importance of the semiconductor industry becomes more and more definite. The semiconductor industry is directly or indirectly connected to all the sectors of the market.

Over the last few years, the importance and demand of semiconductors have become ever more pronounced. Initially, it started from an increased interest in blockchain technology and cryptocurrencies. As that trend started to fade away, the generative AI trend led to another boom in the industry. The computational needs for such technologies paved the way for some of the best semiconductor stocks, like NVIDIA Corporation (NASDAQ:NVDA) and Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), to create ample opportunities for investors. NVIDIA Corporation (NASDAQ:NVDA)’s market cap was somewhere around $400 billion in December 2022 and jumped to $1 trillion by the second quarter of 2023. At the time of writing on December 8, the company had a market cap of $1.17 trillion. Furthermore, its stock has gained over 230% year-to-date (YTD)

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the company that makes all of NVIDIA Corporation (NASDAQ:NVDA)’s chips. While the company’s third-quarter revenues fell year-over-year (YoY), its stock price is up nearly 35% YTD at the time of writing on December 8. However, its stock price gain is not solely dependent on the AI boom but also on better-than-expected sales due to Apple Inc. (NASDAQ:AAPL)’s iPhone 15 launch. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the primary chip supplier of Apple Inc. (NASDAQ:AAPL).

Advanced Micro Devices, Inc. (NASDAQ:AMD) has also made some noise in the AI segment as it unveiled its latest AI accelerator, Instinct MI300X, on December 6. The company also raised its AI Accelerator total addressable market to $400 billion from the prior $150 billion. At the Barclays’ Global Technology Conference, Advanced Micro Devices, Inc. (NASDAQ:AMD)’s CFO Jean Hu said:

“It’s actually a very important milestone and inflection point for AMD to be a strong player in AI compute space. We all know the opportunities are tremendous, and we are really pleased we get to the point we can be very competitive in this marketplace. There are so many announcements yesterday. So, what I’ll do today is just highlight some of the key things we announced yesterday. You can absolutely listen to the webcast and it’s super exciting. First and foremost is, we formally launched MI300A and MI300X and highlighted the performance advantage we have, especially when you think about the inference, MI300X has the industry-leading memory bandwidth and capacity. So, it provide better TCOs for customers. You can either run more models or you can use less GPUs. So, it’s a great product, very competitive. And as we said during our last earnings call, MI300 will be the fastest revenue, $2 billion in our history. And we are very confident about the $2 billion-plus revenue number we talk about for 2024.”

Talent Shortage Concerns in the Industry

A report by the Semiconductor Industry Association (SIA) states that the semiconductor industry’s workforce will increase from 345,000 in July 2023 to 460,000 jobs by 2030, representing a 33.33% growth. While the availability of jobs is something that should be considered good news, the SIA predicts that 58% of projected new jobs are at risk of being unfilled, considering the current degree completion rates. Additionally, while AI is just one growth catalyst of the industry that we mentioned, McKinsey believes that due to autonomous and e-mobility technologies, the semiconductor demand in the automotive sector could triple by 2030. These factors can lead to labor and supply shortages in the future.

While the SIA predicts this labor shortage at the end of the decade, recent events have shown that the industry is already lacking skilled labor. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)’s Arizona plant has been delayed till 2025 due to labor shortages. Furthermore, the company’s plan to build a facility in Germany is also facing the problem of insufficient skilled labor.

Semiconductor Industry Outlook

A December report by the World Semiconductor Trade Statistics organization predicts that the annual global semiconductor sales will decline by 9.4% YoY in 2023 yet increase by over 13% in 2024 to $588.4 billion. The previously mentioned McKinsey report believes that it will become a trillion-dollar industry by 2030, growing at the rate of 6%-8%.

We previously reported that the global semiconductor market was valued at $664.2 billion in 2023 and will grow at a compound annual growth rate of 12.28% through 2032, reaching $1.88 trillion.

Going by the forecasts, it is evident that there is no stopping the semiconductor industry’s growth. Billionaires are also buying into the industry. Some of the best semiconductor stocks, according to billionaires, include NVIDIA Corporation (NASDAQ:NVDA), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), and Lam Research Corporation (NASDAQ:LRCX). One of the most famous hedge fund billionaires, Stanley Druckenmiller of Duquesne Capital, kept NVIDIA Corporation (NASDAQ:NVDA) as his 13F portfolio’s top stock pick in the third quarter of 2023 and said:

“If it’s as big as I think it is, Nvidia is something we are going to want to own for at least two or three years […] I do believe, unlike crypto, AI is real … it could be as transformative as the internet.”

If you aren’t sure about which semiconductor stocks you should invest in, here are the 10 Best Semiconductor ETFs. You can also check out other billionaire stock picks on Billionaire Druckenmiller’s 10 Stocks Picks with Huge Upside Potential, and Billionaires Are Betting On These 10 Energy Stocks.

An aerial view of a high-tech factory, showing the impressive scale of the company’s semiconductor production.

Our Methodology

For this article, we made a list of semiconductor and semiconductor equipment and materials stocks listed on NYSE and NASDAQ using the Yahoo Finance stock screener. From that list, we determined the number of billionaires that bought the companies’ shares during Q3 2023 through Insider Monkey’s database. We listed these stocks in ascending order of the number of their billionaire investors.

Best Semiconductor Stocks According to Billionaires

10. Analog Devices, Inc. (NASDAQ:ADI)

Number of Billionaire Investors: 15

Dollar Value of Billionaire Holdings: $962.265 million

Analog Devices, Inc. (NASDAQ:ADI) is a semiconductor company that carries out the development and marketing of analog, mixed-signal, and digital signal-processing integrated circuits (ICs). The corporation serves more than 125K customers and has around 8K patents under its belt.

On November 21, Analog Devices, Inc. (NASDAQ:ADI) posted its Q4 earnings result with a non-GAAP EPS of $2.01 and revenue of $2.72 billion. For Q1 fiscal 2024, the company forecasted revenue of around $2.5 billion, reported EPS to be around $0.91, and adjusted EPS to be somewhere around $1.70.

On November 21, Analog Devices, Inc. (NASDAQ:ADI) announced a quarterly dividend of $0.86, payable by December 14 to the shareholders of record on December 4. At the time of writing on December 8, the dividend yield of the stock was 1.87%.

Analog Devices, Inc. (NASDAQ:ADI) is one of the best semiconductor stocks according to billionaires, along with NVIDIA Corporation (NASDAQ:NVDA), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), Lam Research Corporation (NASDAQ:LRCX).

Ensemble Capital Management mentioned Analog Devices, Inc. (NASDAQ:ADI) in its third quarter 2023 investor letter. Here is what it said:

“Analog Devices, Inc. (NASDAQ:ADI): Analog Devices, known in the industry as ADI, makes semiconductor chips that predominantly operate at the boundary of the physical world and the digital world, more commonly referred to as analog and mixed signal chips. These chips usually play a supporting role to the sexier “digital brain” that is the latest and greatest processor from Nvidia, Intel, AMD, Apple, or Qualcomm. While the digital brains get a lot more media attention, the supporting analog chips are as vital as those big expensive digital processors in driving value in electronic devices, which are becoming ubiquitous and intelligent throughout our lives.

Anything with an on-off switch requires lots of these analog chips if it is going to relay input and output information with the physical world as well as manage the electrical power supply feeding the device. While these analog chips are relatively inexpensive to manufacture and distribute, it takes a long time to design and build a catalog of literally thousands of specific products to create the scale that makes them economically attractive businesses with a reputation of dependability and quality…” (Click here to read the full text)

9. Micron Technology, Inc. (NASDAQ:MU)

Number of Billionaire Investors: 16

Dollar Value of Billionaire Holdings: $1.81 billion

Micron Technology, Inc. (NASDAQ:MU) is an Idaho-based company that manufactures and provides storage and memory products and solutions under the brands of Micron and Crucial.

On December 6, Mizuho raised the price target on Micron Technology, Inc. (NASDAQ:MU)’s stock to $86 from $82 and kept a Buy rating. According to the analyst, there will be positive tailwinds for memory going into 2024 for DRAM and NAND.

On November 28, Micron Technology, Inc. (NASDAQ:MU) updated its first-quarter fiscal 2024 guidance. It now expects the quarter’s revenue to be near $4.7 billion, up from the prior range of $4.2 billion to $4.6 billion. The company commented that it expects the non-GAAP gross margins to break even, compared to the previously announced guidance of -4%, plus or minus 2%.

As per Insider Monkey’s proprietary data, 16 billionaires had investments in Micron Technology, Inc. (NASDAQ:MU)’s stock at a combined value of $1.81 billion in Q3.

8. Intel Corporation (NASDAQ:INTC)

Number of Billionaire Investors: 17

Dollar Value of Billionaire Holdings: $1.079 billion

Intel Corporation (NASDAQ:INTC) is a California-based tech company that manufactures and sells products like microprocessors, chipsets, embedded processors, microcontrollers, and more.

On December 4, Intel Corporation (NASDAQ:INTC) announced that it signed a Memorandum of Understanding with Siemens AG to collaborate and advance the digitalization and sustainability of microelectronics manufacturing.

On November 7, The Wall Street Journal reported that Intel Corporation (NASDAQ:INTC) is in the lead to receive billions of dollars in government funding for secure facilities manufacturing microchips. While the exact amount has not been disclosed, the funding would be from the $39 billion manufacturing grants authorized under the Chips Act 2022.

ClearBridge Investments commented on Intel Corporation (NASDAQ:INTC) in its third quarter 2023 investor letter. Here is what it said:

“We also added to our position in Intel Corporation (NASDAQ:INTC) to take advantage of signs that it continues to make progress on its goal of regaining technology leadership. Intel appears to be executing its technology/product roadmap; the company is on track to ramp up PC and server products over the next 12 months on advanced manufacturing nodes that we believe will be more competitive with chief rival Advanced Micro Devices. We also see green shoots in the PC and server markets, with an increasing possibility of a cyclical recovery in both end markets in 2024.”

7. QUALCOMM Incorporated (NASDAQ:QCOM)

Number of Billionaire Investors: 17

Dollar Value of Billionaire Holdings: $1.46 billion

QUALCOMM Incorporated (NASDAQ:QCOM) develops wireless telecommunication products like semiconductors and software and provides related services. It is one of the best semiconductor stocks, according to billionaires.

Over the last three months, 20 Wall Street analysts covered QUALCOMM Incorporated (NASDAQ:QCOM), and 13 kept a Buy rating on the stock. The average price target of $137.83 represents an upside of 2.97% at the time of writing on December 8.

According to Insider Monkey’s database, 17 billionaires were bullish on QUALCOMM Incorporated (NASDAQ:QCOM)’s stock with a combined dollar value of $1.46 billion in the third quarter.

6. Broadcom Inc. (NASDAQ:AVGO)

Number of Billionaire Investors: 17

Dollar Value of Billionaire Holdings: $3.1 billion 

Broadcom Inc. (NASDAQ:AVGO) manufactures storage adapters, controllers and ICs, wireless, wired and optical products, and provides mainframe and enterprise software and cybersecurity software.

On December 7, Broadcom Inc. (NASDAQ:AVGO) announced an increase in its quarterly dividend by 14.1% to $5.25. It is payable by December 29 to the shareholders of record on December 20.

On December 7, Broadcom Inc. (NASDAQ:AVGO) posted its Q4 non-GAAP EPS of $11.06, which beat the analysts’ estimates by $0.10. The revenue increased by 4.1% YoY to $9.3 billion and topped the estimates by $20 million.

NVIDIA Corporation (NASDAQ:NVDA), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), and Lam Research Corporation (NASDAQ:LRCX) are the best semiconductor stocks according to billionaires besides Broadcom Inc. (NASDAQ:AVGO).

Broadcom Inc. (NASDAQ:AVGO) was mentioned in ClearBridge Investments’ second quarter 2023 investor letter. Here is what it said:

“While the ClearBridge Multi Cap Growth Strategy has limited mega cap exposure, which has been a recent headwind to relative performance, we own several companies that stand to benefit from the explosive growth in generative AI. These holdings play key roles in building out the necessary infrastructure and helping customers leverage capabilities enabled by this emerging technology.

Semiconductor and software solutions provider Broadcom Inc. (NASDAQ:AVGO), for example, is an important supplier of networking chips that power ethernet switches and routers for connectivity between AI servers. The company sees quarterly revenue from this part of their business exceeding $1 billion in their fiscal third quarter, on a trajectory toward doubling over the course of the year.”

5. Advanced Micro Devices, Inc. (NASDAQ:AMD)

Number of Billionaire Investors: 17

Dollar Value of Billionaire Holdings: $5.99 billion

Advanced Micro Devices, Inc. (NASDAQ:AMD) is a California-based company that manufactures and sells high-performance computing, graphics, and visualization technologies.

On December 6, Advanced Micro Devices, Inc. (NASDAQ:AMD) unveiled its new artificial intelligence accelerator, Instinct MI300X, which the CEO of the company called the most advanced accelerator in the industry.

On December 7, Citi reaffirmed a Buy rating on Advanced Micro Devices, Inc. (NASDAQ:AMD)’s stock with a $136 price target. The analyst pointed out that the corporation’s top customers are Meta Platforms, Inc. (NASDAQ:META) and Microsoft Corporation (NASDAQ:MSFT). The analyst further mentioned that the company’s demonstration of its  MI300 chip’s metrics outperformed that of NVIDIA Corporation (NASDAQ:NVDA)’s H100.

Artisan Partners commented on Advanced Micro Devices, Inc. (NASDAQ:AMD) in its second quarter 2023 investor letter. Here is what it said:

“Among our top contributors were Advanced Micro Devices, Inc. (NASDAQ:AMD), NU Holdings and Netflix. AMD’s data center CPUs are used in the cloud service provider (CSP) servers. In addition to the broader secular tailwind from cloud adoption, the company has a performance and pricing advantage over Intel, which we believe will enable it to continue capturing market share. However, the recent stock price rally was due to growing excitement around the company’s AI exposure. It will launch its new MI300 graphics processing unit (GPU) chip later this year to compete against the dominant market leader NVIDIA. Similar to its approach that won market share from Intel within the CPU market, AMD’s product will aim to provide similar performance at a more attractive price. AMD is already working with Microsoft and Meta, while Amazon publicly stated that it is evaluating AMD’s inferencing chips. Using assumptions around the total GPU market size, potential market share gains and price points, our research indicates this could be a $20 billion opportunity for AMD. That would nearly double its revenue. While the company has not historically missed many deadlines, there is execution risk as it works to manufacture and distribute these complex chips at scale, which, combined with an elevated valuation after the stock’s strong performance run, led us to trim the position.”

4. Applied Materials, Inc. (NASDAQ:AMAT)

Number of Billionaire Investors: 18

Dollar Value of Billionaire Holdings: $$1.587 billion

Applied Materials, Inc. (NASDAQ:AMAT) is engaged in the manufacturing and development of semiconductor and display equipment.

In the third quarter, 18 billionaires had investments in Applied Materials, Inc. (NASDAQ:AMAT)’s stock at a combined value of $1.587 billion.

On December 8, Applied Materials, Inc. (NASDAQ:AMAT) declared a quarterly dividend of $0.32, payable by March 14 to the shareholders of record on February 22. The company has a dividend yield of 0.87% at the time of writing on December 8.

Generation Investment Management commented on Applied Materials, Inc. (NASDAQ:AMAT) in its second quarter 2023 investor letter. Here is what it said:

“Applied Materials, Inc. (NASDAQ:AMAT): Semiconductor revenue has grown 6% per year since 2010, driven by increasing demand for smartphones, datacentres and electronic content in vehicles and industrial settings.4 Through work spanning six roadmaps covering many sub-themes within semiconductors (including industry consolidation, capital equipment and generative AI), we are confident that these trends will continue or even accelerate in the coming decades. The rise of generative AI in particular will require high-performing semiconductors, such as Nvidia’s GPUs, in datacentres.

Traditionally the industry relied on semiconductor manufacturers to deliver steady advances in semiconductor performance while reducing costs. This phenomenon is known as Moore’s Law, which was identified by Intel founder Gordon Moore. Traditionally, Moore’s Law relied on shrinking the light source used to expose photosensitive material on a silicon wafer to make smaller semiconductors, which in turn led to falling costs.

In recent years, however, Moore’s Law has slowed. Manufacturing has run up against the limits of physics. Making semiconductors smaller more cheaply has therefore become difficult. The latest generation of lithography machines that create this light source are marvels of modern science, but they are also expensive to produce, not to mention power-hungry. Delivering performance improvements in the most advanced semiconductors is now becoming costlier. This presents a risk, both to generative AI and a net zero world.

All is not lost, however. The semiconductor industry attracts some of the best minds in the world, many of whom are looking at alternative ways to continue to deliver more power-efficient and cheaper semiconductors. A key area of focus is around developing new materials used in manufacturing semiconductors, and new ways of applying (‘deposition’) and selectively removing (‘etch’) these materials to create the desired semiconductor. Applied Materials is one of the companies in the vanguard of these developments…” (Click here to read the full text)

3. Lam Research Corporation (NASDAQ:LRCX)

Number of Billionaire Investors: 19

Dollar Value of Billionaire Holdings: $3.137 billion

Lam Research Corporation (NASDAQ:LRCX) is an American semiconductor materials and equipment company. It offers wafer-fabrication equipment and related services. The company is headquartered in California.

Lam Research Corporation (NASDAQ:LRCX) has a nine-year history of dividend raises. On November 9, the company declared a $2.00 per share quarterly dividend, payable by January 3 to the shareholders of record on December 13. At the time of writing on December 8, Lam Research Corporation (NASDAQ:LRCX) had a dividend yield of 1.14%.

As of the third quarter of 2023, 19 billionaires had a stake in Lam Research Corporation (NASDAQ:LRCX), making it the third-best semiconductor stock according to billionaires.

2. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)

Number of Billionaire Investors: 20

Dollar Value of Billionaire Holdings: $5.316 billion

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) provides semiconductor foundry services and provided services to 532 customers and developed 12,698 products in 2022.

On November 28, Bernstein raised the price target on Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)’s stock to $125 from $113 and maintained an Outperform rating. It also called the stock its Best Idea for 2024. 

According to Insider Monkey’s database, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is one of the top semiconductor stocks per billionaires as the company shares were owned by 20 billionaires in the third quarter at a combined value of $5.316 billion.

Wedgewood Partners commented on Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its third quarter 2023 investor letter. Here is what it said:

“Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) detracted from performance, as revenues declined 10% from a year ago. The Company is lapping revenue growth of over +40% (compared to 2022) during every quarter of 2023, so it is more instructive to look at the health of the business through the lens of a multi-year timeframe. Most of the Company’s customers have seen near-term weakness in demand due to pandemic normalization. However, we think the longer-term trend of more silicon per device is still very much intact, and the Company is well-positioned to serve this, given its commanding market share in leading edge capacity. The Company’s aggressive investment in leading-edge equipment combined with tight development with fabless IC designers, plus the embrace of open development libraries, should continue to foster a superior competitive position and attractive long-term growth.”

1. NVIDIA Corporation (NASDAQ:NVDA)

Number of Billionaire Investors: 29

Dollar Value of Billionaire Holdings: $15.395 billion

NVIDIA Corporation (NASDAQ:NVDA) is one of the biggest semiconductor companies in the world that sells its products under the brands GeForce NOW, Quadro, GeForce, SHIELD, vGPU, DOCA, JESTON, and Bluefield.

According to Insider Monkey’s database that tracks 910 elite hedge funds, hedge fund sentiment was positive toward NVIDIA Corporation (NASDAQ:NVDA) in Q3, as 180 funds had a stake in the company, compared to 175 in the previous quarter. Billionaire Rajiv Jain’s GQG Partners was the most prominent investor in the company with 14.04 million shares worth $6.1 billion.

Out of the 34 Wall Street analysts that covered NVIDIA Corporation (NASDAQ:NVDA) over the last three months, 31 kept a Buy rating on the stock. The average price target of $661 had an upside of 38.94% at the time of writing on December 8.

ClariVest Asset Management, LLC mentioned NVIDIA Corporation (NASDAQ:NVDA) in its third quarter 2023 investor letter. Here is what it said:

“During the third quarter of 2023, an underweight to real estate and an overweight to healthcare helped performance, while an overweight to information technology and an underweight to energy detracted. Stock selection was strong within information technology and consumer staples but was weak within financials and communication services. NVIDIA Corporation (NASDAQ:NVDA) designs, develops and markets 3D graphics processors and related software. The company also expanded its partnership with Google Cloud to advance AI computing, software and services.”

Insider Monkey focuses on uncovering the best investment ideas of hedge funds and investors. Please subscribe to our daily free newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.

Suggested articles:

• 12 Best Materials Dividend Stocks To Buy Now
• 16 Most Undervalued Value Stocks To Buy According To Hedge Funds
• 20 Most Expensive States to Live in 2024

Disclosure. None. 10 Best Semiconductor Stocks According to Billionaires is originally published on Insider Monkey.