Artificial Intelligence (AI) Could Make Semiconductors a $1 Trillion Market by 2030: Here Are 3 Top Stocks to Buy Now

“A $1 trillion industry by the end of the decade.” That’s what global consulting firm McKinsey & Company projects for semiconductors. It’s not an outlandish prediction at all, considering that the semiconductor market already tops $500 billion.

Unsurprisingly, McKinsey ranks artificial intelligence (AI) as one of the top growth drivers for semiconductors in the coming years. Investors have plenty of ways to profit from the rapidly growing semiconductor market. Here are three top stocks to buy now.

1. Advanced Micro Devices

Nvidia is, without question, the 800-pound gorilla making AI chips right now. But don’t overlook Advanced Micro Devices (NASDAQ: AMD).

The company launched its Instinct MI300 graphics processing units (GPUs) in December 2023. AMD CEO Lisa Su claimed the new chips “are the highest-performance accelerators in the world for generative AI.” Three tech giants are already planning to use the MI300 chip — Microsoft, Meta Platforms, and Oracle.

While AMD hopes to gain on Nvidia in the server market, the company also has great expectations for its AI personal computer (PC) chips. AMD president Victor Peng told CNBC earlier this month, “We are seeing AI PCs becoming a bigger factor.” He added that the company has “a good lead in AI PCs,” thanks to its recent product announcements.

Some investors were disappointed with AMD’s guidance for 2024 first-quarter revenue. However, it’s shortsighted to focus on just one quarter. AI is still only in its early innings, and AMD appears to be well-positioned to deliver strong long-term growth.

2. Applied Materials

Back in the gold rush days, the providers of picks and shovels often profited more than the gold miners themselves. I think that Applied Materials (NASDAQ: AMAT) is a great example of a “picks-and-shovels” play in the semiconductor market.

Applied Materials makes semiconductor fabrication equipment and provides services and consulting to support chipmakers. In addition, the company sells equipment used to manufacture displays for electronic devices.

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