These 3 Chip Stock Kings Are Still Buys for 2025

Key Points

• Some of the biggest names in the semiconductor industry have also been some of the biggest winners in 2024.
• A dominant market position is a tough thing to achieve, but it is extremely valuable once acquired.
• These three stocks should continue to dominate their respective areas of the market, setting them up for the potential of big success in 2025.

Among chip stocks, these three stand out for their ability to dominate their respective markets. Combined with the AI arms race in big tech, their leading positions set their stocks up for massive returns in 2024. That is exactly what happened, with these names returning 182%, 123%, and 97% as of the Dec. 26 close. As we move into 2025, these companies can continue capitalizing on their strengths and have another strong year. Below, I’ll reveal these firms and explain the thesis around why they can keep rising.

NVIDIA: The King of Kings

First up is the inextricable NVIDIA NASDAQ: NVDA. Customers have shown insatiable demand for the company’s graphical processing units that accelerate the computation of AI workloads. And just because a new year is upon us, it is hard to see this trend changing. As of yet, no other company has stepped up to truly compete with NVIDIA in systems-based AI infrastructure and GPUs. Advanced Micro Devices NASDAQ: AMD is trying to catch up, but the results simply aren’t comparable yet.

Anyone who wants top-notch AI infrastructure will need to go through NVIDIA one way or another. That is unless they are willing to pay up to buy from another company on this list. NVIDIA faces more competition. But it still has the fastest GPUs. It also has fantastic systems and software to package with them.

Within this domain, it is the undisputed champ. The biggest risk for NVIDIA isn’t competition; it’s the idea that the AI revolution doesn’t bear the much-promised fruit. I’m not of the belief that that will be the case, but there will likely be speedbumps along the way. In 2025, more AI applications creating real-world impacts should emerge. This should further boost demand for NVIDIA's advanced chips.

Broadcom: NVIDIA’s Real Arch Rival

Broadcom NASDAQ: AVGO is another company dominating its respective niche of the semiconductor market. It’s really the only firm competing with NVIDIA when it comes to providing massive amounts of AI computing power. However, it offers a different solution to the same problem compared to NVIDIA. The company focuses on designing application-specific integrated circuits (ASICs). These are chips that the company makes for a specific customer, customizing them to meet their needs. Because they are the only customers that can use them, purchasing these chips from Broadcom requires a massive upfront investment. However, the specialization of these chips means they are extremely efficient. Over time, they save data center operators money due to their lower energy usage and longer life spans.

Broadcom shares have been skyrocketing lately after the firm’s Q3 earnings release. The company did not disappoint, growing total revenue by 51% and AI-driven revenues by 220%. The company also announced it had acquired three new hyperscaler customers, with a chance to add two more. These announcements indicate tens of billions in future revenue for the firm.

On top of this, Broadcom has other parts of its business that have been in a slowdown. Analysts have been waiting for a return to growth in these markets. If that happens in 2025, combined with massive ASIC demand, Broadcom stock could have another fantastic year.

TSMC: One Chip Maker to Rule Them All

Last is one of the most important companies in the world, Taiwan Semiconductor Manufacturing Corporation NYSE: TSM. The company is the centerpiece of a potential war between the United States and China, indicating just how important it is. TSMC intuitively ties in with the other two stocks, as it is the company that actually manufactures many of the chips NVIDIA and Broadcom design. At the beginning of 2024, the company manufactured approximately 90% of the world’s most advanced semiconductors. That remains the case today.

Thus, as long as the demand for constantly more advanced semiconductors remains, TSMC’s services will be in strong demand. As technology companies and governments have strong interests in always staying ahead of their competition, I don’t see the importance of TSMC budging anytime soon.

Barring a major conflict in the South China Sea, TSMC should continue its strong performance. TSMC also isn’t standing still against this risk. To combat it, it is building out facilities in the United States. Reports say that TSMC is in talks with NVIDIA to develop its new Blackwell AI chip at its Arizona plant.