Semiconductor stocks to watch have been at the forefront of technological innovation. One of the benchmark ETFs that track the semiconductor industry is the VanEck Semiconductor ETF (NYSEARCA:SMH), which has total net assets of over $11 billion. It had 50% growth within the last year and nearly quadrupled over the previous five.
Three semiconductor companies offer investors significant returns and are expected to keep growing, especially in the environment of increased investor sentiment for generative AI.
ON Semiconductor (ON)
ON Semiconductor (NASDAQ:ON), located in Scottsdale, Arizona, is a semiconductor manufacturer that produces integrated circuits primarily for the automotive industry as well as other forms of applications. Their products help with power conversion, signal amplification, enhancing radio frequencies and voltage regulation. Their customer base includes business and government organizations, In which they also provide foundry services.
Over the past year, ON Semiconductor has seen its share price grow by 18%. There was a reasonably sharp drop-off in late October following their fourth-quarter earnings estimates, which reduced their sales forecast to between $1.95 and $2.05 billion and their earnings per share, which the consensus was $1.37. ON Semiconductor reported a likely range of $1.13 to $1.27.
Along with their fourth quarter estimates, they released their earnings result for the third quarter, announcing that total revenue was practically unchained and net income grew 87% compared to the year before. More specifically, their specialization—automotive industry revenue, saw a revenue increase of 33% within the same period.
Rambus (RMBS)
Rambus (NASDAQ:RMBS), in San Jose, California, provides semiconductor products in the U.S. and internationally. They produce memory interface chips for mobile phone manufacturers, government agencies, data center applications and the automotive industry.
Over the past year, their stock has risen 72% due to an improved overall financial position and a positive outlook. On Oct. 30, Rambus announced third-quarter earnings results, which stated that total revenue slightly declined 6% year-over-year, and their earnings per share went from $0.01 in Q3 2022 to $0.93 per share in Q3 2023. Rambus also initiated a share buyback program in which they purchased $100 million in stock. Rambus expects to continue to see growth within their product segment directed towards data centers partially due to the expanded generative AI industry.
Advanced Micro Devices (AMD)
Advanced Micro Devices (NASDAQ:AMD), headquartered in Santa Clara, California, is one of the most popular semiconductor producers on the market. They operate multiple business segments, including data center technology and client-based gaming solutions. They produce graphics processing units (GPUs) and processors for various uses in data centers and customer-based gaming capabilities. Their products include the Ryzen Threadripper, AMD Ryzen, AMD Athlon, AMD Radeon and AMD Geode.
AMD has seen its share price double in the last year due to several factors, including its growing product revenue and increased involvement in the overall market excitement surrounding generative AI. On October 31, they announced their third-quarter earnings report, which stated that their total revenue grew by 4% and their net income surged by over four-fold to $299 million compared to the year before. Year-over-year, their data center revenue remains practically unchanged, their client-based revenue increased by 42%, their gaming segment saw a slight decrease in overall earnings, and their embedded segment saw a slight decline.
As of this writing, Noah Bolton held a LONG position in ON. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.