5 Best Semiconductor Stocks To Buy For The AI Boom

In this article, we will be taking a look at the 5 best semiconductor stocks to buy for the AI boom. To read our detailed analysis of the semiconductor industry and the impact of AI on the sector, you can go directly to see the 10 Best Semiconductor Stocks To Buy For The AI Boom.

5. Micron Solutions, Inc. (NASDAQ:MU)

Number of Hedge Fund Holders: 73

Christopher Danely at Citigroup holds a Buy rating on Micron Solutions, Inc. (NASDAQ:MU) shares as of June 30, alongside a $75 price target.

Micron Solutions, Inc. (NASDAQ:MU) is one of the few semiconductor companies making DRAM and NAND flash memory chips, which are essential for any AI system. This makes the company a direct beneficiary of the recent AI boom.

Our hedge fund data for the first quarter shows 73 funds long Micron Solutions, Inc. (NASDAQ:MU), with a total stake value of $2.7 billion.

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

Number of Hedge Fund Holders: 73

Analog Devices, Inc. (NASDAQ:ADI) was seen in the portfolios of 73 hedge funds at the end of the first quarter, with a total stake value of $4.9 billion.

A Positive rating was reiterated on Analog Devices, Inc. (NASDAQ:ADI) shares on June 13 by Christopher Rolland at Susquehanna, who also holds a $215 price target on the stock.

Analog Devices, Inc. (NASDAQ:ADI) is a semiconductor company working on data conversion, signal processing, and power management tech. It is based in Wilmington, Massachusetts, and is offering a new line of AI microcontrollers that run AI inferences much faster than other solutions.

First Pacific Advisors mentioned Analog Devices, Inc. (NASDAQ:ADI) in its first-quarter 2023 investor letter:

“Analog Devices, Inc. (NASDAQ:ADI) stock price declined in the first half of 2022, along with its semiconductor peers. That sector has since rebounded, lifting ADI with it. We believe ADI is a well-run company and a secular grower, which should augur well for its future. However, given that it operates in a cyclical industry, we will not be surprised when its shares periodically trade down.”

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

Number of Hedge Fund Holders: 91

Advanced Micro Devices, Inc. (NASDAQ:AMD) is a company set to rival others in the AI space with its AI chips.

As of July 12, TD Cowen analyst Matthew Ramsay holds an Outperform rating and $135 price target on Advanced Micro Devices, Inc. (NASDAQ:AMD) shares.

In the first quarter, 91 hedge funds were long Advanced Micro Devices, Inc. (NASDAQ:AMD). Their total stake value was $4.9 billion.

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

Number of Hedge Fund Holders: 102

Out of the 943 hedge funds tracked by Insider Monkey in the first quarter, 102 funds were long Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), with a total stake value of $8.9 billion.

Mehdi Hosseini at Susquehanna holds a Positive rating on Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) shares as of June 16, alongside a $128 price target.

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) offers cutting-edge AI processors used by big tech companies across the US today, alongside other semiconductor products and solutions.

Here’s what Baron Funds said about Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its first-quarter 2023 investor letter:

“Semiconductor giant Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) contributed in the first quarter due to easing geopolitical concerns and expectations for end-demand recovery later in 2023. We retain conviction that Taiwan Semi’s technological leadership; pricing power; and exposure to secular growth markets, including high-performance computing, automotive, 5G, and IoT; will allow the company to sustain strong earnings growth over the next several years.”

1. NVIDIA Corporation (NASDAQ:NVDA)

Number of Hedge Fund Holders: 132

NVIDIA Corporation (NASDAQ:NVDA) is the current market leader in the AI chips space, where it dominates all other rival companies with its fast processing chips and GPUs.

NVIDIA Corporation (NASDAQ:NVDA) had 132 hedge funds long its stock during the first quarter. Their total stake value in the company was $12.3 billion.

A Buy rating was maintained on NVIDIA Corporation (NASDAQ:NVDA) shares by William Stein at Truist on July 14, alongside a $545 price target.

Artisan Partners said the following about NVIDIA Corporation (NASDAQ:NVDA) in its second-quarter 2023 investor letter:

“Top contributors to performance for the quarter included graphics semiconductor company NVIDIA Corporation (NASDAQ:NVDA). Nvidia rose after reporting strong results and forecasting significantly higher data center revenues for the coming quarter, driven by rising artificial intelligence investments around the world.

When we are successful in achieving disproportionate equity outcomes, we need a process for managing them. Entering this year, we had a ~6.5% position in Nvidia. Due to the enthusiasm for generative AI and a rapid conclusion to “cloud optimization,” the stock has surged 189.5% this year including 52.31% in Q2. We retained an investment in Nvidia with less capital at risk, an approach which afforded us the potential to prudently participate in excellent investments over long periods of time. Notably, despite our gradual position reductions, Nvidia has contributed 1491bps to performance since inception. In turn, these value pathways form the foundation upon which our risk management framework rests, and put us in position to execute our investment program in future periods of duress.”

See also 10 Tech Stocks Benefiting From The AI Boom and 10 Best Semiconductor Equipment Stocks to Buy.