11 favored semiconductor stocks expected to -2-
For Nvidia, it is difficult to estimate results in what still seems to be the new industry of using GPUs to support AI. But the analysts keep trying. Here are projected compound annual growth rates for sales and EPS for the same group of 12 companies for the next two calendar years. The 2026 estimates are available for all but Semtech Corp. (SMTC) and Micron, with a 2026 sales estimate available for Broadcom Inc. (AVGO). We have used consensus estimates as adjusted by FactSet from calendar 2024 through calendar 2026, because some of the companies have fiscal years that don't match the calendar.
At the bottom of the table are expected CAGR for the PHLX Semiconductor Index and the S&P 500. Some notes about the data follow.
Company Ticker Expected two-year sales CAGR through 2026 Expected two-year EPS CAGR through 2026 Semtech Corp. SMTC N/A N/A Allegro MicroSystems Inc. ALGM 14.0% 38.8% Ichor Holdings Ltd. ICHR 9.8% 142.2% Marvell Technology Inc. MRVL 24.2% 50.3% Advanced Micro Devices Inc. AMD 23.2% 43.3% SiTime Corp. SITM 27.7% 89.6% Onto Innovation Inc. ONTO 15.2% 31.6% Micron Technology Inc. MU N/A N/A Broadcom Inc. AVGO 11.3% N/A First Solar Inc. FSLR 22.0% 47.3% Taiwan Semiconductor Manufacturing Co. ADR TSM 18.0% 21.8% Nvidia Corp. NVDA 26.1% 26.5% PHLX Semiconductor Index SOX 12.4% 22.7% S&P 500 SPX 5.8% 13.2% Source: FactSet
For Semtech, estimates are not available for calendar 2026. The consensus among analysts polled by FactSet is for the company's revenue to increase by 19% in calendar 2025, with EPS increasing by 143%.
For Micron, analysts expect calendar 2025 sales to increase 35%, with EPS increasing 173%.
For Broadcom, the table shows an expected two-year sales CAGR of 11.3% through 2026, but no EPS estimate is available for 2026. For 2025, EPS is expected to increase by 24%.
Market Extra: As Nvidia drives a chip rally in 2024, why are some AI stocks getting left behind?
Looking back through up/down cycles
Take a look at this five-year total-return chart for SOXX against SPY, with dividends reinvested. It shows not only that the semiconductor group has been outperforming, but also how volatile these stocks can be. During 2022 - a down year for the stock market - SPY fell 18%, but SOXX dropped 35%.
Can you ride out these difficult cycles for several years? If so, narrowing some of your portfolio allocation to semiconductors may be worthwhile over the long term.
You should do your own research to form your own opinions before making any investment. One way to begin is by clicking on the tickers for any company, ETF or index above.
Click here for Tomi Kilgore's detailed guide to the wealth of information available for free on the MarketWatch quote page.
Don't miss: Nine hot stocks, including Nvidia, that have become more attractive by this critical metric
-Philip van Doorn
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
06-29-24 0648ET
Copyright (c) 2024 Dow Jones & Company, Inc.-
4 Predictions for Stocks and the Economy for the Second Half of 2024
-
What Broadening Rally? AI Stocks Dominate Again In Q2
-
After Earnings, Is Nike Stock a Buy, a Sell, or Fairly Valued?
-
Worst-Performing Stock ETFs of the Quarter
-
Top-Performing Stock ETFs of the Quarter
-
Q2 In Review and Q3 2024 Market Outlook
-
5 Stocks to Buy for 3Q 2024
-
Best- and Worst-Performing Stocks of Q2 2024
-
Industrials: Sector Offers Investment Opportunities as Performance Lags Broader Market
-
Consumer Defensives: Even Amid Macro Pressures, Deals Permeate the Landscape
-
33 Undervalued Stocks
-
Utilities: Can the Stocks Keep the Rally Going?
-
Basic Materials: Following Index Decline, We See Many Long-Term Opportunities
-
Healthcare: Valuations Look Attractive In Most Industries
-
Financial Services: Amid Uncertainties, We See the Most Value In Banks and Credit Services
-
Consumer Cyclicals: Even With Anxiety Over Spending, We See Attractive Valuations