How to Retire Rich: Semiconductor Stocks Edition

With digitalization becoming increasingly integrated into our everyday lives, semiconductor stocks for retirement may be a prudent idea. Fundamentally, computer chips undergird the innovations we deploy. Further, as productivity demands increase, chips need to accelerate in capacity to stay ahead of the curve.

Moreover, artificial intelligence chatbot ChatGPT points toward technological advancements as a key reason to attempt to retire rich with semiconductors. As the AI protocol states, semiconductors represent the building blocks of modern electronic devices, powering everything from smartphones to computers to autonomous vehicles. Unless you see these arenas as passing fads, the best chipmakers command enormous long-term relevancies.

Also, the best semiconductor stocks benefit from a burgeoning demand profile. Thanks to the proliferation of connected devices, the Internet of Things (IoT), cloud computing, and data centers, the need for advanced chips should go up, not down. Therefore, sustained relevance should provide confidence for retirees. Finally, many companies in this space provide a balance between capital returns and passive income. If you’re seeking an accelerated path to your golden years, these may be the ideal semiconductor stocks to buy.

Intel (INTC)

To be sure, tech giant Intel (NASDAQ:INTC) incurred more than its fair share of setbacks and misfires. Nevertheless, the company seems to have finally found its footing. Since the beginning of this year, INTC gained over 33% of equity value. While it’s still down in the past 365 days, INTC mitigated the red ink, now down only 8%.

Moving forward, the market seems encouraged by rumors that Intel is hosting talks with semiconductor firm Arm. Essentially, the tech icon wants to be an anchor investor in Arm’s initial public offering. Notably, in the trailing five sessions, INTC popped up 13%, making it one of the best-performing semiconductor stocks for retirement.

Although bruised by the aforementioned setbacks, Intel still commands relevant intellectual property. As well, the company demonstrated that it still levers design and manufacturing prowess. Earlier this year, management announced the world’s fastest mobile processor. Combined with a modest but still sector-beating forward yield of 1.41%, INTC makes an intriguing case for the best semiconductor stocks to buy.

Nvidia (NVDA)

As a leading designer of graphics processing units (GPUs), it’s no surprise that ChatGPT elected Nvidia (NASDAQ:NVDA) as one of the semiconductor stocks for retirement. While GPUs historically provided firepower for advanced games, they increasingly undergird data centers and AI protocols. Given that the AI trajectory only seems to point in a northbound trajectory, NVDA seems a reasonable long-term wager.

Currently, though, the main criticism against Nvidia as a vehicle to retire rich with semiconductors is its valuation. Not too long ago, Wall Street maven Cathie Wood trimmed her exposure to NVDA. According to Gurufocus, the market prices NVDA at nearly 224 times trailing earnings. Also, shares trade at a forward multiple of 57.9. No matter how you look at it on paper, it’s steeply overvalued.

Still, because of the explosive growth potential of AI and other GPU-intensive markets such as data centers, the paper valuation might not fully account for the long-term total addressable market. Thus, if you don’t mind a little speculation in your retirement portfolio, NVDA could be an intriguing play among high-growth semiconductor stocks.

Advanced Micro Devices (AMD)

Specializing in the design and development of microprocessors and related technologies for the computer and consumer electronics industries, Advanced Micro Devices (NASDAQ:AMD) in recent years accelerated from being a poor person’s Intel to a legitimate standalone tech superpower. It also has the goods to back it up. Since the start of the year, AMD almost doubled in market value.

Also, in the trailing year, AMD gained almost 43%. Undergirding recent positive sentiment is its latest semiconductor and data center products optimized for AI, according to Investor’s Business Daily. At a company event earlier this week, AMD showcased its latest Epyc server processors and a new AI accelerator chip series. Combined with a broader interest in AI-related investments, AMD managed to gain nearly 8% in the last five sessions.

To be fair, Advanced Micro doesn’t make a traditional case for semiconductor stocks for retirement. However, it’s a relevant growth machine that can enliven your portfolio. Per Gurufocus, AMD’s three-year revenue growth rate (on a per-share basis) clocks in at 35.7%. Also, its EBITDA growth rate during the same period impresses at 76%.

Taiwan Semiconductor (TSM)

With its namesake country under geopolitical crosshairs, Taiwan Semiconductor (NYSE:TSM) may seem unusually risky for semiconductor stocks for retirement. However, the sheer relevance of TSM might win over hesitant market participants. Per ChatGPT, Taiwan Semiconductor is the world’s largest dedicated independent semiconductor foundry, offering manufacturing services for a wide range of customers.

Just like many other high-growth semiconductor stocks, TSM delivered the goods recently. In the trailing month, shares returned over 25% of market value. So far this year, the security gained slightly over 45%. Notably, Cathie Wood – while trimming her Nvidia exposure – recently initiated a position in TSM.

Financially, TSM ranks among the best semiconductor stocks to buy for top-line expansion. Per Gurufocus, Taiwan Semi’s three-year revenue growth rate pings at 28.4%, above 82.72% of its peers. Also, its EBITDA growth rate comes in at 32.8% during the same period, above 64.67%. Finally, the company features a forward yield of 1.82%.

Texas Instruments (TXN)

Headquartered in Dallas, Texas Instruments (NASDAQ:TXN) ranks among the more compelling ideas for semiconductor stocks for retirement. Per ChatGPT, Texas Instruments is known for its analog and embedded processing chips, which find applications in various industries such as automotive, industrial, and communications. Since the start of this year, TXN gained almost 9% of its equity value.

Unlike the other chip manufacturing ideas, TXN rides a slow news cycle. A few days ago, the company announced plans to expand its manufacturing base in Malaysia. The deal would involve two new assembly and test factories. Still, for those seeking to retire rich with semiconductors, TXN may offer a discounted opportunity.

According to Gurufocus, TXN appears undervalued relative to discounted cash flow. Based on its analysis, the fair value for TXN should be $288.05. However, at the time of writing, shares trade hands at just over $177. On the passive income side, Texas Instruments offers a forward yield of 2.8%. That’s noticeably above the tech sector’s average yield of 1.37%, making it a top choice for semiconductor stocks for retirement.

Broadcom (AVGO)

If you’re a believer that strength begets more strength, Broadcom (NASDAQ:AVGO) might be an enticing idea for high-growth semiconductor stocks. In the trailing five sessions, AVGO jumped over 11%. Over the past 30 days, shares rocketed higher by almost 39%. For the year so far, Broadcom investors have enjoyed a return of slightly over 60%.

Providing a range of semiconductor and infrastructures software solutions, Broadcom surged on a report that its proposed merger with VMware (NYSE:VMW) received conditional approval from the European Commission. If the rumor is confirmed, it would close what has been a long investigative process. Financially, Broadcom offers a bit of a mixed bag. However, its greatest strength lies in its profitability. In particular, its trailing-year net margin clocks in at 39.06%, beating out 97.23% of the competition. Also, its return on equity (ROE) impresses at a robust 62.26%.

Notably, the company also carries a forward yield of 2.08%. As well, its payout ratio sits at 40.56%, providing confidence regarding sustainability. Overall, AVGO makes a strong case for semiconductor stocks for retirement.

Applied Materials (AMAT)

A leader in materials engineering and equipment for the semiconductor industry, Applied Materials (NASDAQ:AMAT) enables the production of advanced chips. Thanks to its wide-ranging relevancies, investors have jumped aboard the AMAT train with vigor. Since the start of this year, shares have soared to the tune of nearly 46%. Over the course of the past one-year period, AMT gained just under 45%, making it an enticing play for semiconductor stocks for retirement.

Fundamentally, unless you envision a world where advanced protocols like AI fall by the wayside, you’re going to want to give Applied Materials extra attention. For example, the burgeoning field of generative AI will require expensive new chips. Therefore, if you missed the ride on other high-flying tech names, you could get onboard AMAT.

Financially, the company benefits from a three-year revenue growth rate of 23.9%, which beats out 76.15% of sector players. Also, its EBITDA growth rate during the same period comes in at an impressive 32.1%. Notably, its trailing-year net margin pings at 24.36%, ahead of 89.15% of rivals. Finally, the market prices AMAT at a forward multiple of 19.12. As a discount to projected earnings, the company ranks better than 66.17% of the field, making it an enticing pick for the best semiconductor stocks to buy.

On the date of publication, Josh Enomoto 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.