Chip production shortages and changes in demand have reduced earnings in 2019, but the semiconductor market is on track for a big comeback next year. Analysts are predicting an upside for investments across the board. Now is the perfect time to start researching potential stocks.
According to data collected by FactSet, the world’s most prominent semiconductor companies will generate double digit sales growth next year.
Here are three of the most promising stocks to consider.
Advanced Micro Devices Could Grow Revenue by 25%
Analysts have predicted 25% full year sales revenue growth for Advanced Micro Devices (NASDAQ: AMD) in 2020. This company produces graphics cards and processors for laptops, desktops, and server computers. AMD also creates the hardware found in popular game consoles from Sony and Microsoft.
AMD stock has been a solid performer for the semiconductor market in 2019, and its growth should continue into next year.
Nvidia Corp. Could Grow Revenue by 17%
Nvidia (NASDAQ: NVDA) creates graphics cards and chips, as well as SoC chips used in standalone devices like game consoles and tablets. The company also provides microprocessors to the supercomputing and deep learning markets.
Nvidia enjoys a strong market position, especially in the consumer graphics space. It has been a strong revenue performer in recent years, and it should be able to generate 17% top line growth in 2020.
Qualcomm Inc. Could Grow Revenue by 17%
Another company expected to see strong sales growth in 2020 is Qualcomm Inc. (NASDAQ: QCOM). The company creates SoC chips that are found in smartphones from every major manufacturer. Samsung, LG, Sony, OnePlus, and Google are some examples of device makers using Qualcomm hardware.
The next cycle of cellular phone updates will help Qualcomm to grow next year. In addition to producing its own chips, Qualcomm is a major patent holder, allowing it to generate licensing revenue from companies like Apple.
In addition to an expected 17% revenue increase in 2020, Qualcomm also has a dividend with a yield above 3% at today’s price.
Don’t Want to Micromanage? Consider an ETF
An ETF could be a great alternative to individual stocks. The iShares PHLX Semiconductor ETF (NASDAQ: SOXX) contains all three stocks listed above, as well as other top performers like Intel (NASDAQ: INTC) and Texas Instruments (NASDAQ: TXN). The ETF has generated a 33% return in 2019, outperforming major stock market benchmarks.
Whether through stocks or an ETF, the semiconductor industry will be primed for investment in 2020.
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