Semiconductor sales have been soaring at a rapid pace, powered by the continued optimism surrounding artificial intelligence (AI) and demand from other industries. In fact, semiconductor stocks have largely been responsible for the broader Wall Street over the past couple of years.
This year has been particularly great for the semiconductor industry, following a stellar 2024, and the robust demand for chips is expected to further boost sales. Given this scenario, it would be ideal to invest in semiconductor stocks, such as Advanced Energy Industries, Inc. AEIS, Analog Devices ADI and RF Industries, Ltd. RFIL.Each of these stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Robust Demand Driving Semiconductor Sales
Global semiconductor sales totaled $64.9 billion in August, up 4.4% sequentially from July’s total of $62.1 billion, the Semiconductor Industry Association (SIA) said last week. On a year-over-year basis, semiconductor sales rose 21.7% from the August 2024 total of $53.3 billion.
The report added that sales in August were driven by robust growth in the Asia Pacific and the Americas, which saw a solid jump in sales of memory and logic chips. Year over year, semiconductor sales jumped 43.1% in the Asia Pacific/All Other and 25.5% in the Americas, followed by 12.4% in China and 4.4% in Europe.
Semiconductor sales have been growing at a rapid pace this year, totaling $179.7 billion in the second quarter, up 7.8% from the first quarter. This increase came after a stellar 2024 when chip sales hit $627.6 billion, a 19.1% jump from the 2023 total of $526.8 billion.
A significant portion of this growth was driven by rising demand for data center processors and memory components. As investments in AI continue to ramp up, analysts predict that the semiconductor market will maintain double-digit growth through 2025.
3 Semiconductor Stocks With Growth Potential
Advanced Energy Industries, Inc.
Advanced Energy Industries, Inc. is one of the leading suppliers of power subsystems and process-control technologies to the semiconductor industry. AEIS now focuses primarily on power-conversion solutions, including direct current, pulsed DC, low-frequency, high-voltage, and radio frequency power supplies, as well as matching networks and remote plasma sources for reactive gas applications and RF instrumentation to leverage the semiconductor, flat panel display, and industrial markets.
Advanced Energy Industries’ expected earnings growth rate for the current year is 53.1%. The Zacks Consensus Estimate for current-year earnings has improved 10.3% over the past 60 days. AEIS currently carries a Zacks Rank #2.
Analog Devices
Analog Devices is an original equipment manufacturer of semiconductor devices, specifically, analog, mixed-signal and digital signal processing (“DSP”) integrated circuits. ADI’s product line comprises amplifiers and comparators; analog to digital converters; digital to analog converters; video encoders and decoders; embedded processing products and DSPs; MEMS and temperature sensors; RF/IF components and converters; power and thermal management ICs, audio/video converters, amplifiers, CODECs, filters and processors. Analog Devices also offers analog, digital and RF switches and multiplexers; analog microcontrollers; clock and timing products.
Analog Devices’ expected earnings growth rate for the current year is 21.5%. The Zacks Consensus Estimate for current-year earnings has improved 4.7% over the past 60 days. ADI carries a Zacks Rank #1.
RF Industries, Ltd.
RF Industries, Ltd. is engaged in the design, manufacture and distribution of coaxial connectors used in radio communications applications as well as in computers, test instruments, PC LANS and antenna devices.
RF Industries’ expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 20.8% over the past 60 days. RFIL presently sports a Zacks Rank #1.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in the coming year. While not all picks can be winners, previous recommendations have soared +112%, +171%, +209% and +232%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Analog Devices, Inc. (ADI) : Free Stock Analysis Report
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RF Industries, Ltd. (RFIL) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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