Published on November 17, 2023, 9:21 am

“Chip Stocks In The Ai Era: Exploring The Leading Players In The Semiconductor Industry”

Founded in 1993, The Motley Fool is a financial services company that aims to make the world smarter, happier, and richer. Through their premium investing solutions, free guidance, market analysis on, top-rated podcasts, and non-profit organization The Motley Fool Foundation, they reach millions of people every month. But today, we’ll be focusing on the semiconductor industry and the impact of artificial intelligence (AI) on chip stocks.

The semiconductor industry is already experiencing high demand, but advancements in AI technology are fueling an even bigger wave of demand. Some of the leading semiconductor producers are capitalizing on this trend and reaping the benefits.

Nvidia (NVDA) is a global leader in graphics processors (GPUs), primarily used for personal computing and gaming applications. However, its powerful data center chips have propelled it into the AI space. Nvidia’s latest release, the H200 chip, boasts 141 gigabytes of HBM3e memory at 4.8 terabytes per second. With this enhanced capacity, AI developers can train models faster and shorten their time to market. Data center chips accounted for 76% of Nvidia’s total revenue in the recent fiscal 2024 second quarter.

Axcelis Technologies (ACLS), unlike Nvidia, specializes in manufacturing ion implantation equipment critical to the chip fabrication process rather than producing or designing chips themselves. A significant portion of Axcelis’ recent growth is driven by strong demand for its Purion systems used in power device production for automotive applications. These systems enable efficient silicon carbide power device manufacturing necessary for electric vehicles that require fast charging and increased mileage capabilities. Moreover, Axcelis is preparing for future AI-driven demand by developing chips with higher memory and storage capabilities.

Micron Technology (MU) stands out as one of the world’s leading producers of memory chips required for AI applications such as DRAM and NAND capacities. Although Micron faced challenges in its data center segment recently, it experienced substantial growth in AI-related server hardware. One of its latest chips, the D5 memory chip, offers double the performance of its previous iteration, enabling faster data processing. Micron predicts sequential top-line growth in the upcoming quarter, indicating a potential upswing after a tough period.

Advanced Micro Devices (AMD) has also faced declining demand for computers and devices over the past year. Nevertheless, AMD’s leading chips are found in popular consumer products like Microsoft’s Xbox Series X and Tesla’s infotainment systems. The company is now focusing on shipping its new MI300 line of chips designed specifically for AI workloads. Additionally, AMD’s collaboration with Microsoft on the Ryzen AI series of chips allows users to process AI tasks on-device, promising faster processing times and improved user experiences. In the recent third quarter of 2023, AMD’s revenue rebounded thanks to these new chips.

Investors looking for long-term semiconductor stocks that benefit from the AI revolution may find Nvidia and AMD particularly appealing options. These companies have established themselves as leaders in their respective segments and are well-positioned to capitalize on the growing demand for advanced technologies like AI.

The Motley Fool does not have positions in any chip stocks mentioned but highlights how these four companies are at the forefront of innovation and poised to deliver significant upside over the next decade. So if you’re considering investing in this industry, keep an eye on these chip stocks as they navigate through the evolving landscape shaped by Generative AI.


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