Many of the best semiconductor stocks to buy have outpaced the stock market in recent years. There’s even an ETF that specifically focuses on semiconductor stocks. This fund, the iShares Semiconductor ETF (NASDAQ:SOXX), has crushed the S&P 500, delivering a 295% gain over the past five years. It’s also outperformed the tech-heavy Nasdaq Composite during that stretch. SOXX is also up by an impressive 32% year-to-date.
As artificial intelligence tailwinds blow, the winners seem to keep winning. Revenue and earnings have been soaring for many semiconductor firms, translating into plenty of gains for patient investors. Some semiconductor stocks look poised to deliver exceptional gains for people accumulating shares. Investors may benefit from monitoring these three of the best semiconductor stocks to buy.
Nvidia (NVDA)
Nvidia (NASDAQ:NVDA) continues to defy expectations and lead AI stocks higher. The semiconductor giant has amassed a $3 trillion market cap and looks like it will breeze past Microsoft (NASDAQ:MSFT) to become the world’s most valuable publicly traded company. Shares are up by 153% year-to-date and have rallied by more than 3,000% over the past five years.
Financial results suggest that the gains can go up from here. Nvidia reported 262% year-over-year revenue growth in Q1 FY25, while net income soared by 628% year-over-year. The company continues innovating its Blackwell platform and remains the industry’s leader.
Competitors haven’t been able to keep up. An analyst recently poured cold water on Advanced Micro Devices (NASDAQ:AMD), stating it’s “no Nvidia.” Wall Street isn’t feeling so optimistic about the competition. Clearly, Nvidia is a dominant force and arguably has a monopoly over the industry. Other semiconductor firms are also benefitting from AI, but Nvidia has a gigantic lead over its competitors.
Synopsys (SNPS)
Synopsys (NASDAQ:SNPS) has delivered solid long-term gains for its investors. Shares are up by 15% year-to-date and have gained 362% over the past five years. The stock trades at a 63 P/E ratio and has an $88 billion market cap.
The firm regularly posts net profit margins above 20% and continues fulfilling that expectation for investors. Synopsys reported 15% year-over-year revenue growth in Q2 FY24 while achieving 7% year-over-year net income growth.
Synopsys should report accelerated revenue and earnings growth once the Ansys (NASDAQ:ANSS) acquisition goes through. However, the stock presents a compelling opportunity before the two companies join forces. Ten analysts currently rate Synopsys as a Strong Buy, with a projected 13% upside from current levels. The lowest price target of $620 still implies some upside. The most bullish analyst gave a $675 price target, which implies a 17% upside from current levels.
Qualcomm (QCOM)
Qualcomm (NASDAQ:QCOM) offers “growth at a reasonable price.” Shares trade at a 28 P/E ratio and offer a 1.62% yield. The stock has tripled over the past five years and is up 49% year-to-date.
The corporation should report higher financial growth as more smartphone companies incorporate AI into their devices. Headwinds seem to be in the past, as the chipmaker reported 1% year-over-year revenue growth in Q2 FY24. That’s not much, but the company had been reporting year-over-year revenue declines for several quarters, which is a step in the right direction. Net income increased by a more promising 37% compared to last year’s quarter.
EPS came in at $2.06, exceeding Qualcomm’s high end of guidance. The upcoming Snapdragon X platform launch should further reinvigorate revenue growth and lead to healthy profit margins. Qualcomm tends to report net profit margins above 20%.
On this date of publication, Marc Guberti held long positions in NVDA and SNPS. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.