3 Semiconductor Stocks to Buy Instead

If you’re eager to invest in the semiconductor industry, you have plenty of reason. Semiconductors are in myriad things we use every day — including our smartphones, cars, and even toothbrushes.

Plus, the industry is expected to grow at a solid clip in the years to come. Estimates differ, of course, but per the folks at Allied Market Research, the semiconductor market is expected to nearly double in size between 2021 and 2031, reaching $1 billion. The Semiconductor Industry Association recently reported January 2024 global semiconductor industry sales up 15% year over year.

The most appealing semiconductor stock, arguably, is Nvidia, in large part due to its torrid recent growth. It’s up an eye-popping 19,000% over the past decade, averaging annual gains of 69%. For context, the S&P 500 averaged gains of nearly 12% in that same period. According to some analysts, though, Nvidia shares may have gotten ahead of themselves and may be due to fall in price.

If you agree, you’re not out of luck. There are other semiconductor stocks out there with seemingly more appealing valuations. Here are three to consider — plus a bonus idea.

1. Skyworks Solutions

Skyworks Solutions (NASDAQ: SWKS), with a recent market value approaching $15 billion, is focused on wireless networking technology, with customers including Amazon, Apple, Alphabet, Broadcom, Samsung and many other big names. In all, it boasts more than 8,000 customers, roughly 4,900 patents, and fiscal 2023 operating cash flow up 30% year over year.

Shares recently dipped after the company posted solid second-quarter results but warned of weakness in the mobile arena that could depress operations for a while. This may not be welcome news, but the stock can deliver a more attractive entry price for those who want to own it long term and who anticipate a mobile recovery and long-term growth.

One tailwind for Skyworks Solutions may be the proliferation of artificial-intelligence-enabled smartphones.