Mention potential chip stocks to invest in and Nvidia (NASDAQ:NVDA) is likely the first name that springs to mind. That’s for good reason: Nvidia is a dominant force in artificial intelligence and its chips are in high demand. It also seems you can’t read a headline about the stock market that isn’t somehow connected to the company. However, there are plenty of other strong chip stocks to buy not named Nvidia.
Some of those stocks represent firms that are vital suppliers to Nvidia and other chip manufacturers. Others represent firms in direct competition. Still, others represent a mix of suppliers and competition.
Whatever the case, there are many strong choices for chip stocks for investors to consider.
Taiwan Semiconductor (TSM)
Taiwan Semiconductor (NYSE:TSM) is one of the most important semiconductor companies in the world, if not the most important companies overall. Its stock is the largest foundry globally and a vital link in the supply chain.
Many semiconductor firms rely on a business model known as fabulous manufacturing. Such firms design their hardware and chips, manufactured by foundries, Taiwan Semiconductor being the largest.
Taiwan Semiconductor makes roughly 90% of the world’s advanced chips. It is responsible for the cutting-edge, advanced AI chips that firms, including Nvidia, make.
The company made a bullish call on chip manufacturing demand early this year, forecasting 20% revenue growth. That call immediately spiked shares by more than 10%, and they have since risen by an additional 30%.
Taiwan Semiconductor doesn’t command the impressive multiples that Nvidia does, but analysts believe it can continue growing at its present price.
Micron (MU)
Micron (NASDAQ:MU) suffered more than almost any other chip stock throughout the past few years. Pandemic chip shortages hit the specialized memory chip manufacturers particularly hard. Firms over-ordered Micron chips, a supply glut caused demand for those chips to crater, and the company suffered huge operating losses in 2023.
Micron generated operating losses for the first time in over a decade in 2023. Then, suddenly, the fortunes of the company changed.
The company’s specialized high bandwidth memory (HBM) is in high demand. It has applications for the artificial intelligence chips that firms demand. It also began producing HBM, which will be used in Nvidia’s H200 chips.
The company’s HBM products remain in high demand. Most of its 2025 capacity is already booked. HBM allows artificial intelligence chips to perform better, so investors should keep their eye on MU shares. Demand is sky-high, which can still push share prices higher.
AMD (AMD)
AMD (NASDAQ:AMD) is among the very best positioned chip stocks available to investors today. It is, of course, the primary challenger of Nvidia’s dominance. It has emerged as such a potent competitor because Its chips are nearly as powerful as those from Nvidia yet cost a fraction of the price.
Thus, AMD represents the best bang for your buck in the AI chip landscape. Are enterprises willing to risk investing in AMD chips over Nvidia’s? Leading chip purchasers, including Meta Platforms (NASDAQ:META), Microsoft (NASDAQ:MSFT) and OpenAI have each announced plans to use AMD’s MI300X AI platform.
However, the answer is not that simple. AMD’s newest platform boasts better specifications than Nvidia’s H100 platform. Nvidia is releasing its H200 platform soon. Comparison is, therefore, muddled. Further, Nvidia has stronger software, which is particularly important in AI applications.
Overall, AMD has a chance to compete with Nvidia, although it is not a clear-cut case. It’s why investors should continue to bet on AMD.
ASML (ASML)
ASML (NASDAQ:ASML) is another integral link in the advanced chip manufacturing supply chain. The company monopolizes advanced lithography machines used to make the most advanced chips. Essentially, no other firm can replicate the products it produces, giving it a near monopoly.
A lot has been said about those extreme ultraviolet lithography machines it produces and their importance overall. While that is integral to its story, let’s look at another less covered factor.
ASML has been identified as one of 18 European equivalents to the U.S. Magnificent 7 stocks. UBS (NYSE:UBS) handpicked the Dutch company as one with the potential to outperform significantly. It should be a relatively easy choice for American investors, given that ASML is a tech firm. It is, therefore, very similar to the Magnificent 7, which relies heavily on technology.
AI demand is going to continue to grow. That means ASML’s EUV machines will continue to be in high demand as the cutting edge fabrication machines that they are.
Qualcomm (QCOM)
Qualcomm (NASDAQ:QCOM) stock has performed well this year, rising from $140 to $175. That strong performance is paradoxical because the company’s fortunes are generally tied to phone sales.
Demand for expensive handsets is lagging currently. Consumers continue to feel the pinch of inflation and are more hesitant to purchase phones that can easily cost north of $1,000. Qualcomm is a major supplier of cell phone chips, and thus, should struggle.
However, Qualcomm is not. Qualcomm’s Snapdragon Gen 8 and Snapdragon Gen 8S chips drive the generative AI on the phone market. The company is iterating its generative AI features down throughout the price range of cell phones. Those chips were first applicable to high-end models and, in time, will bring generative AI capability to lower and lower-range models. It is easy, then, to see why QCOM stock makes so much sense at this time: People spend increasingly more time on their phones and AI opportunities therein are massive.
Broadcom (AVGO)
Broadcom (NASDAQ:AVGO), like Qualcomm, is a reliable stock choice for chip stocks investors. Both firms include dividends that signal overall reliability. That isn’t the primary reason for considering investing in Broadcom, but I wanted to mention it.
The bigger and more important reason is that Broadcom is an integral chip firm and part of the overall AI opportunity. The company develops infrastructure software solutions for semiconductors. Basically, Broadcom helps chip firms derive greater AI output from the same quantity of power.
The company is also thriving fundamentally. During the most recent quarter, revenues increased by 34%, reaching $11.96 billion. The company repurchased 7.7 million shares of stock and eliminated them. Broadcom is also known to hike its dividends annually.
AVGO Stock is an excellent choice for more conservative investors looking to exploit the AI boom. While Broadcom doesn’t benefit from outsized valuation multiples like Nvidia, its impressive growth is very attractive.
Skyworks (SWKS)
Skyworks (NASDAQ:SWKS) is a chip supplier that derives a significant portion of its sales from Apple (NASDAQ:AAPL).
It is similar to Qualcomm, an integral chip supplier to the iPhone maker. Like Qualcomm, Skyworks stock currently includes a dividend yielding 2.6%.
The application of generative AI to handsets is still nascent. That’s arguably the best reason to consider Skyworks at the moment. It derives a significant portion of its sales from cell phones. As that market grows, so should company-wide opportunities. Skyworks is positioned to grow with that emerging market.
Investors should also note that there are potential pitfalls despite Skyworks’ overall strength. Apple continually makes efforts to bring chip production in-house. Qualcomm has served as an excellent example of that truth. The risk that Apple walks away is one that the company continually has to navigate.
Yet, Qualcomm has proven that it is difficult for Apple to do so. Thus, the overall opportunity for Skyworks seems to be strong.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.