Semiconductor Stocks Are Expected To Post Their Best First Half On Record This Year

Investors have been showing strong interest in semiconductor stocks this year, driven by their belief in the potential of artificial intelligence and a renewed focus on technology names. As a result, the VanEck Semiconductor ETF (SMH) has experienced significant growth, with an increase of approximately 45%, positioning it to achieve its best first-half performance on record. The previous closest six-month stretch occurred in 2003 when it achieved a surge of 27.45% during the first half and finished the year with a remarkable gain of 87.31%, its highest on record.

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Despite the impressive performance of the sector, Wall Street analysts foresee further upside for several prominent semiconductor companies. To identify potential winners, CNBC Pro conducted an analysis using FactSet data to identify stocks with a buy rating of 55% or higher and an upside potential of at least 10% based on the average price target provided by analysts.

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Among the selected stocks, Nvidia stands out as no surprise. The company's shares have surged by over 160%, capturing Wall Street's attention due to the growing prominence of artificial intelligence, particularly after the impressive debut of ChatGPT. Nvidia is widely regarded as the leading chipmaker in the industry, and its exceptional quarter and strong guidance, driven by soaring demand for its technology, have reinforced this perception. While some analysts anticipate a potential pullback in the short term following the significant rally, they maintain confidence in Nvidia's long-term growth prospects, despite the stock's high valuation. The average price target indicates a nearly 15% upside from Thursday's closing price.

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Marvell Technology is also viewed favorably by Wall Street analysts as a winner in the semiconductor space and a potential beneficiary of the AI trend. The stock has surged by more than 60% in 2023, experiencing a one-day rally of over 32% last month after surpassing earnings expectations. Bank of America's Vivek Arya recently described Marvell as an "underappreciated" winner in the AI field, while Barclays labeled it a "safer way" to incorporate the burgeoning technology into investment portfolios. Over 83% of analysts hold a buy rating for the stock, and the average price target suggests an additional 10% upside.

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Analog Devices and Microchip Technology also meet the criteria set forth by analysis, indicating their potential for continued growth and market outperformance.

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