3 Semiconductor Stocks You’ll Regret Not Buying Soon

Stocks to buy

Currently, top semiconductor stocks to buy now are propelled by four catalysts. The auto sector and artificial intelligence are having a huge impact on the semiconductor sector as a whole. With the presence of advanced driver assistance systems spreading rapidly, the amount of chips they utilize is climbing. Meanwhile, the types of chips that are integral to AI production are creating massive profits for the chipmakers.

Strong demand from industrial-end users and the rebound of consumer electronics are also motivating the sector. ON Semiconductor (NASDAQ:ON) has described the former trend, while Intel (NASDAQ:INTC) recently pointed out the latter rebound. Because of this, investors should consider these top semiconductor stocks to buy now.

NXP Semiconductors (NXPI)

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Last quarter, about 75% of NXP Semiconductors’ (NASDAQ:NXPI) revenue was derived from automotive, industrial or Internet of Things (IoT) customers.

The company’s revenue from the auto sector rose 2% versus Q1 and 9% YOY, while its sales from industrial and IoT companies rose 15% versus Q1. Meanwhile, NXPI’s overall cash flow from operations came in at an impressive $756 million, while the firm returned nearly $570 million to its shareholders through dividends and share repurchases.

Calling the Q2 results “solid,” investment bank Evercore (NYSE:EVR) ISI kept a $240 price target and an “outperform” rating on the shares.

NXPI has a high “Relative Strength” score of 91 from Investor’s Business Daily, indicating that the shares have performed well over the last year. Meanwhile, its elevated Accumulation/ Distribution grade of B suggests that large investors have been buying the name in the last 13 weeks.

ON Semiconductor (ON)

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Because it’s well-positioned to benefit from rapid increases in the demand for chips from the automotive and industrial sectors, I’ve been bullish on ON Semiconductor in past columns.

Last quarter, ON Semiconductor’s automotive revenue soared 35% YOY to over $1 billion, while its industrial sales climbed 5% YOY. I believe all indicators point to the company being poised to surge, despite its EPS and sales seeing little change from Q2 of 2022. Given Intel’s comments on increasing demand for PCs, ON should get a lift from its “consumer-facing industrial” customers.

Investment bank BMO Capital recently identified ON as a growth-at-a-reasonable price name. Additionally, Fintel.io gives ON high Quality and Momentum scores of 84 and 79.3, respectively. These rankings make ON Semiconductors an obvious top semiconductor stocks to buy now.

Intel (INTC)

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Intel looks poised to get strong boosts from multiple, powerful trends. Specifically, the company is well-positioned to be lifted by the increased demand for PCs and by its AI chips. One of Intel’s top competitors, Nvidia (NASDAQ:NVDA), produces expensive AI chips that have a backlog of orders. Additionally, Intel plans to manufacture chips for other semiconductor companies, and that business has tremendous potential.

Intel expects the demand for PCs and chips to rebound soon because of the work-from-home trend. Over the longer term, the company reported that PCs will be widely used as a means of utilizing AI.

Additionally, speaking on Bloomberg TV on July 28, CEO Pat Gelsinger said that the “world is looking for open, cost-effective AI chips,” and he indicated that Intel’s products could help fill that void.

Finally, on the manufacturing front, Intel is starting to make chips for other companies. The company is also building a large semiconductor factory in Arizona, and will get subsidies for its chip factories from Washington and the EU. Further, Nvida has expressed interest in having Intel build its chips.

On the date of publication, Larry Ramer was long INTCThe opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been PLUG, XOM and solar stocks. You can reach him on Stocktwits at @larryramer.

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