3 Stocks to Buy as Semiconductor Sales Skyrocket on AI Optimism

The semiconductor industry is making a remarkable comeback, fueled by the optimism surrounding artificial intelligence (AI), especially generative AI, which has significantly boosted demand for microchips.The robust demand across a range of industries has led to considerable revenue growth for chipmakers over the past year, following a dull 2022 and 2023. As a result, the semiconductor sector has played a major role in lifting overall market performance, becoming a major contributor to last year’s market rally.Given this scenario, it would be ideal to invest in semiconductor stocks, such as Taiwan Semiconductor Manufacturing Company Limited TSM, Advanced Energy Industries, Inc. AEIS and RF Industries, Ltd. RFIL. Each of these stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.Semiconductor Sales Keep RisingWorldwide sales of semiconductors jumped 3.5% sequentially in May, climbing from April’s $57 billion to $59 billion, the Semiconductor Industry Association (SIA) reported earlier this week. Year over year, sales surged a whopping 19.8%, marking the 11th consecutive month of year-over-year growth above 17%.SIA President and CEO John Neuffer said, “Global semiconductor demand remains high, with first-quarter sales substantially outpacing the first quarter of last year. Year-to-year sales increased by more than 17% for the 11th consecutive month, driven by a year-to-year sales increase of roughly 45% in the Americas.”Semiconductor sales experienced an unexpected decline earlier this year, triggered by fears over the competitive strength of U.S. tech firms after the launch of China’s low-cost AI platform, DeepSeek. However, industry experts downplayed those fears, calling DeepSeek overhyped and not a serious threat to U.S. tech firms.Positive Outlook for the Semiconductor IndustryThe impressive growth in May builds on a stellar 2024, when global semiconductor revenues hit $627.6 billion — up 19.1% from $526.8 billion in 2023. The first quarter of 2025 alone generated robust revenues, totaling $167.7 billion, up 18.8% from the year-ago levels.Much of this growth came from strong demand for data center chips and memory products. With the ongoing investments in AI, analysts expect the semiconductor market to continue expanding at a double-digit pace well into 2025.3 Semiconductor Stocks With Growth PotentialTaiwan Semiconductor Manufacturing Company LimitedTaiwan Semiconductor Manufacturing Company Limited is the world's largest dedicated integrated circuit foundry. As a foundry, TSM manufactures ICs for its customers based on their proprietary IC designs using its advanced production processes. Taiwan Semiconductor Manufacturing Company Limited’s goal is to establish itself as one of the world's leading semiconductor companies by building upon the strengths that have made it the world's leading IC foundry.Taiwan Semiconductor Manufacturing Company Limited’s expected earnings growth rate for the current year is 34.1%. The Zacks Consensus Estimate for current-year earnings has improved 2.7% over the past 60 days. TSM presently carries a Zacks Rank #1.Advanced Energy Industries, Inc.Advanced Energy Industries, Inc. is one of the leading suppliers of power subsystems and process-control technologies to the semiconductor industry. AEIS now focuses primarily on power-conversion solutions, including direct current, pulsed DC, low-frequency, high-voltage, and radio frequency power supplies, as well as matching networks and remote plasma sources for reactive gas applications and RF instrumentation to leverage the semiconductor, flat panel display, and industrial markets.Advanced Energy Industries’ expected earnings growth rate for the current year is 39.1%. The Zacks Consensus Estimate for current-year earnings has improved 1.8% over the past 60 days. AEIS currently carries a Zacks Rank #2.RF Industries, Ltd.RF Industries, Ltd. is engaged in the design, manufacture and distribution of coaxial connectors used in radio communications applications as well as in computers, test instruments, PC LANS and antenna devices.RF Industries’ expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 4.3% over the past 60 days. RFIL presently sports a Zacks Rank #1.Higher. Faster. Sooner. Buy These Stocks NowA small number of stocks are primed for a breakout, and you have a chance to get in before they take off.At any given time, there are only 220 Zacks Rank #1 Strong Buys. On average, this list more than doubles the S&P 500. We’ve combed through the latest Strong Buys and selected 7 compelling companies likely to jump sooner and climb higher than any other stock you could buy this month.You'll learn everything you need to know about these exciting trades in our brand-new Special Report, 7 Best Stocks for the Next 30 Days.Download the report free now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Taiwan Semiconductor Manufacturing Company Ltd. (TSM): Free Stock Analysis Report Advanced Energy Industries, Inc. (AEIS): Free Stock Analysis Report RF Industries, Ltd. (RFIL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks