This year has been largely one of the haves and the have-nots in the semiconductor industry. Statistical measurements show a skewed relationship between the winners and losers.
Among 62 semiconductor companies on U.S. and Canadian exchanges, the median return is just 0.8% in 2024. This means that approximately half of those 62 companies had returns below 0.8%, and the other half had returns above it. But the average return is 8.8%. The average return is 8% higher than the median, showing that the best-performing companies rose more than the worst fell. The average return is pulled up, highlighting this year's “winner-takes-most” nature of the semiconductor market.
Some firms have performed well despite moderate or even negative revenue growth figures. Analysts expect some of these firms to see stronger sales growth over the next quarters and years, which means they may be set up for future success. Below, I’ll highlight three such stocks.
Trends in Segment Sales Could Set Marvell Technologies Up to Win
Marvell (NASDAQ: MRVL) has provided a very strong total return this year of 38%; however, its revenue growth certainly has not been strong. Last quarter, sales fell by 5% from the previous year's quarter, and trailing 12 months, sales are down 6%. However, over the next two years, analysts are projecting strong upticks in sales. Over the next year, analysts expect sales growth to rise back up to just under 1%, but they predict that things will really take off two years from now. Analysts are expecting revenue to rise by 35% in 2026.
The stock has been able to rise this year largely due to its massive increase in data center revenue, which grew by 92% last quarter. However, every other segment of its business declined by over 30% year over year. But those other parts of its business may have hit their bottom. They either increased or slightly declined quarter over quarter. This sets up the opportunity for strong data center revenue growth and accelerating growth in its other business segments in the coming years.
AMD Sales Expected to Accelerate, But Still in NVIDIA’s Shadow
Analysts expect Advanced Micro Devices (NASDAQ: AMD), better known as AMD, to see its sales rise substantially. Investors are surely disappointed in the stock this year, which has returned less than 1% after a recent fall. It's seen that the stock of its main competitor, NVIDIA (NASDAQ: NVDA), has increased its value by nearly three times over the same period, with a total return of 181%.
In Q2, the company’s sales rose by just under 9%. However, in its most recent results released on Oct. 29, it saw a big uptick, growing by 18% from the previous year. The company is expecting to see a further acceleration in sales in Q4, guiding for an increase of 22%. Despite this, shares were down nearly 11% the day after the release. This was due to midpoint revenue guidance coming in $50 million below expectations and several analyst downgrades.
It's debatable whether this is an overreaction, considering $50 million is less than 1% of the company’s total revenue last quarter. However, it is also not unsurprising, considering expectations are extremely high for this company that wants to become a true rival to NVIDIA. The market wants to see AMD raise revenue guidance, not just come close to what they projected previously. In 2025, analysts are expecting revenues to grow by 28%. Still, AMD is in a tough position, as its results are going to be harshly compared to NVIDIA.
Monolithic Revenue Growth Acceleration Expected to Continue in Q4
Last is Monolithic Power Systems (NASDAQ: MPWR). The company specializes in making chips that regulate power efficiency within a system, including those in data centers. This stock has also had a great 2024, providing investors with a total return of nearly 46%. The company’s sales are recovering, increasing 15% in Q2 after four quarters of negative or just slightly positive growth. The company’s Q3 earnings release on Oct. 30 showed revenue increasing nearly 31%, which was 5% higher than estimates.
Growth is expected to accelerate further in the last quarter of 2024, with analysts expecting a 34% increase. Although growth is expected to moderate to 21% in 2025 and 18% in 2026, those are still solid numbers, especially considering the expected 25% increase in adjusted earnings per share.
