Semiconductors are poised to dominate the markets in the coming years, with a growth rate of 14.9%. Here are some protagonists of the next megatrend with growth potential of up to 34%.
Citi has identified the 6 best stocks to follow the next $684 billion megatrend. The global semiconductor market is in the midst of an epochal transformation and could beat the S&P 500. Valued at $611.35 billion in 2023, it is expected to grow to $2,062.59 billion by 2032, with a CAGR of 14.9% between 2024 and 2032. This extraordinary growth is fueled by the growing use of consumer electronics and the expansion of emerging technologies such as Artificial Intelligence (AI), the Internet of Things (IoT) and Machine Learning (ML). These technologies require advanced semiconductors to improve device performance, creating unprecedented market opportunities.
In this context, Citi has identified 6 stocks with high growth potential, which could dominate the next rally. Let’s look at each of these stocks in detail, illustrating their role in the future of the semiconductor industry.
Nvidia
- Nvidia weekly graph
- Source: Tradingview
Nvidia is the undisputed leader in the AI GPU market. Recently seen an impressive performance in the stock market, with the share price having surpassed $1,200, up 210% over the past year. This success is fueled by its technology leadership and growing demand for advanced graphics processing units for AI applications. Citi analysts expect Nvidia to dominate 90-95% of the AI GPU market in 2024 and 2025, supported by an accelerated roadmap and a strong technology position spanning chips and software. With a price target of $1,500 recently assigned by BofA, Nvidia represents one of the safest bets in the semiconductor landscape. The potential upside is very respectable, equal to approximately 24% from current levels.
ASMPT
- ASMPT weekly graph
- Source: Tradingview
ASMPT, listed on Hong Kong, is another key stock identified by Citi. The company is renowned for its advanced packaging solutions, particularly the thermocompression binder (TCB), which is essential for AI applications. Analyst Kevin Chen of Citi expects ASMPT to benefit significantly from the growing demand for advanced packaging solutions, with significant contributions expected in 2024 and 2025. The fact that the stock is already present in the Franklin FTSE Hong Kong ETF, with a weighting of 1.1%, reflects investor confidence in its growth potential. According to Citi, this stock could grow by 26.4% over the next 12 months.
Ibiden
- Ibiden weekly graph
- Source: Tradingview
Ibiden, listed on the Tokyo Stock Exchange, stands out for its leadership in high-end ABF (Ajinomoto Build-Up Film) substrates used in AI GPUs. Citi is optimistic about Ibiden’s future, thanks to its strong market share and medium-term earnings growth prospects. Analyst Takayuki Naito expects a recovery in sales of ABF substrates for general-purpose servers by fiscal 2026, supported by sales related to generative AI. Ibiden is included in the BlackRock Future Tech ETF with a weighting of 0.5%, indicating recognition of its potential in the advanced semiconductor sector. The potential upside indicated by Citi for this stock is 18.4%.
Samsung Electronics
- Samsung Electronics weekly graph
- Source: Tradingview
Samsung Electronics, a major player in the South Korean technology sector, tops Citi’s list. The investment bank expects a significant increase in HBM high-bandwidth memory shipments in 2024 and 2025, supported by AI investments from Cloud Solution Provider (CSP) customers. With a 23.6% weighting in the iShares MSCI South Korea ETF, Samsung Electronics represents a solid investment opportunity in the advanced memory segment.
Citi has indicated a potential upside of 34% from current values for Samsung.
SK Hynix
- SK Hynix weekly graph
- Source: Tradingview
SK Hynix, another South Korean technology giant, is set to play a crucial role in the HBM3E chip market. Citi points out that SK Hynix expects a steady supply of these chips until 2025, in line with customer needs. Despite market concerns about oversupply, analyst Peter Lee believes HBM’s demand visibility continues to improve, thanks to AI investments. SK Hynix is among the stocks that make up the iShares MSCI South Korea ETF with a weighting of 8.4%. According to Citi, this stock could grow by 16.8% from current values.
Sony
- Sony weekly graph
- Source: Tradingview
Sony, through its subsidiary Sony Semiconductor Solutions, is expanding its business into advanced semiconductors. Analysts at Macquarie Equity Research recently raised their rating for Sony Group, highlighting the successful launch of Helldivers II as a positive factor for the games division. Macquarie has calculated a target price of $108 (or 16,868 JPY) approximately 35% away from current values. According to Citi, the stock can rise by 30.1%.
With operating profit forecast to rise for the fiscal year ending in March 2024, Sony is well positioned to benefit from expansion in the semiconductor sector. This growth potential is recognized by analysts, who see an increase in the Gaming division’s contribution to the company’s overall profits.
|DISCLAIMER
The information and considerations in this article should not be used as the sole or primary basis for making investment decisions. The reader maintains full freedom in his own investment choices and full responsibility in making them, since he alone knows his risk propensity and his time horizon. The information contained in the article is provided for informational purposes only and its disclosure does not constitute and should not be considered an offer or solicitation to the public for savings.|
Original article published on Money.it Italy 2024-06-08 13:53:00. Original title: I 6 titoli migliori per seguire il prossimo megatrend da $684 miliardi
