Why Micron and AMD are the best semiconductors for 2024

Key Points

• Nvidia has delivered the most gains from the space in recent years, but the near-term picture is changing. 
• Both Micron and AMD have been picked by multiple analysts as top semiconductor stocks for 2024. 
• Emerging industry tailwinds are set to benefit them in particular, and investors should be excited. 

Perhaps no other industry dominated the stock market in 2023 like that of semiconductors. With the advent of artificial intelligence (AI) and the seemingly endless applications for it, the demand for semiconductors and processing hardware exploded. It helped chip stocks shake off any remaining negativity they endured throughout 2022 and helped dissipate any remaining headwinds for the time being. 

While Nvidia Corp NASDAQ: NVDA has firmly grasped the title of the market leader in the space, there are plenty of voices on Wall Street who feel there are better semiconductor stocks to own. Two, in particular, have kept pace with Nvidia and are among the best alternatives heading into 2024. 

While Nvidia may have dominated in terms of gains over the past couple of years, the more recent picture tells a very different story. Since semiconductors started rallying again at the end of October, Nvidia shares have tacked on 15%, but Micron has doubled that while AMD has more than tripled it. Let’s dive into each of them for a closer look at their prospects for 2024. 

Micron Technology NASDAQ: MU

Shares of Micron finished up about 75% last year, and in doing so, all but undid the damage from 2022’s slump. There’s still some ground to be made up before they set a fresh all-time high at the $100 mark, but they look good value to do that this coming year. 

The team at Wells Fargo came out with bullish comments earlier this week, naming Micron a top pick in the semiconductor space. They see generative artificial intelligence continuing to grow for the foreseeable future, and the analysts there, led by Aaron Rakers, anticipate there is a shift toward more cyclically-oriented companies in 2024. They’re looking for a solid 69% and 15% year-over-year uptick in the memory segment of the semiconductor industry for 2024 and 2025, respectively, which should benefit firms like Micron. 

Further bolstering the bull’s case was the upgrade from Piper Sandler yesterday. The team there boosted their rating on Micron shares to Overweight from Neutral and a fresh price target of $95, which bodes particularly well for those of us considering getting involved. From where shares closed on Thursday, it’s pointing to a further upside of at least 15%.

Advanced Micro Devices, Inc. NASDAQ: AMD

AMD ended 2023 with its highest print in a year, and the fact that shares have softened somewhat since then has only made the entry opportunity more attractive. The stock is down close to 10% this week so far, but investors shouldn’t expect it to hang around here too long. 

The UBS team named AMD, alongside Micron, a top chip pick for 2024 last month. The team there feels the entire industry is starting to enter a “sweet spot,” with the inventory cycle having peaked and revenue targets becoming more and more achievable. With interest rates set to start declining this year, too, there should be a solid uptick in downstream demand, which can only be a good thing for results. 

The team at KeyCorp took a similarly bullish stance this week, too, when they reiterated their Overweight rating on AMD shares and gave them a fresh price target of $170. From where shares closed last night, that’s pointing to a further upside of at least 25%. And the best part? It would have AMD stock back at all-time highs and in blue-sky territory.