Are these the best semiconductor stocks to watch in spring 2025?
Explaining the significance of semiconductor companies, and a rundown of some of the best semiconductor stocks to watch. These are the five largest semiconductor stocks in the world by market capitalisation.
Semiconductor companies are those involved in the design, manufacturing, and distribution of semiconductor devices and related technology.
Semiconductors explained
Semiconductors — or microchips — are essential to the functioning of electronic devices and have recently seen particular investor interest given the rise of the AI sector. Without semiconductors, there would be no computers, smartphones, gaming, or a hundred other applications, all of which are essential to 21st century living.
OpenAI’s revolutionary ChatGPT chatbot, the growing political importance of AI development, and Nvidia’s dizzying rally are all testament to the importance of the sector. With significant growth in AI interest expected through the next decade and beyond, investing in semiconductor stocks within a diversified portfolio could be an attractive proposition.
For context, giants including Intel and ASML consider that annual global spending on semiconductors will rise to $1 trillion by 2030, up from just $570 billion in 2022. It’s also worth noting that China and the US are both attempting to harm each other’s ability to use advanced semiconductors to develop AI technology; the US through export bans of certain semiconductors and China through export bans of certain critical minerals. The two countries are also currently in a trade war where high tariffs could significantly impact the manufacturing process and profit margins of many tech companies.
Best semiconductor stocks to watch
Before delving into some of the most popular individual semiconductor shares, it’s worth highlighting that there are many popular, diversified ETFs which offer exposure into multiple companies on a low cost basis.
For example, the Vaneck Vectors Semiconductor UCITS ETF holds 25 of the world’s largest semiconductor companies and is a common choice for investors who want broad exposure to the sector without the need to conduct additional research.
In terms of individual shares, the five stocks listed below are widely considered to be the largest AI companies in the world by market capitalisation right now. However, analysts disagree on what exactly constitutes a semiconductor stock, and further, these may not be the best value opportunities.
Nvidia
Nvidia shares have been on a dizzying rally to a $2.4 trillion valuation, rising by 2,080% over the past five years. The microchip behemoth was arguably the most popular semiconductor stock of 2023 — though of course, popularity does not mean it is the best investment available.
Nvidia CEO and founder Jensen Huang recently enthused that ‘accelerated computing and generative AI have hit the tipping point. Demand is surging worldwide across companies, industries and nations…NVIDIA RTX, introduced seven years ago, is now a massive PC platform for generative AI, enjoyed by 100 million gamers and creators.’
Fiscal Q4 results saw Nvidia’s revenue rise by 78% year-over-year to some $39.33 billion, including record data centre revenue of $35.6 billion, up by 93%.
However, there are risks. Super Micro Computer is deeply tied to Nvidia as it makes the titan’s servers — and Super Mico's recent results saw the company miss revenue estimates. Nvidia also has a huge price-to-earnings ratio, alongside significant exposure to a faltering Chinese economy and rising Sino-US export tensions.
Nvidia reports Q1 results on 22 May.
Market cap: $2.4 trillion
Broadcom
Broadcom may not be the most fashionable name in the semiconductor world, but the company’s designs and manufacturing acumen underpins masses of data center, networking, software, broadband, wireless, storage, and industrial markets.
In fiscal Q1 results, Broadcom saw revenue rise by 25% year-over-year to almost $15 billion, with $6.1 billion in free cash flow. This strong performance was largely driven by its infrastructure software and AI semiconductor solutions.
CEO Hock Tan is optimistic for Broadcom’s performance claiming that We expect continued strength in AI semiconductor revenue of $4.4 billion in Q2, as hyperscale partners continue to invest in AI XPUs and connectivity solutions for AI data centres."
Despite this, potential US tariffs could negatively impact performance if implemented.
Market cap: $8 billion
Taiwan Semiconductor Manufacturing Company
While Nvidia is touted as the ‘picks and shovels’ semiconductor stock for 2023, this crown could arguably belong to Taiwan Semiconductor Manufacturing Company. Most chip producers — including Nvidia — outsource actual production to the Taiwanese company, with the country responsible for making circa 90% of the world’s most advanced chips.
TSMC shares have did well in 2023 and 2024 given the AI-driven demand, its colossal manufacturing capacity and the wide economic moat surrounding starting up any sizeable competitor.
However, Taiwan’s complex political status, including its relationship with China and the impact of US tariffs remain a long-term risk. The company recently announced plans to build a second semiconductor manufacturing plant in Japan.
Market cap: $6.5 billion
ASML
ASML is a world leader in chip-making equipment. It’s a common misconception that the company actually makes semiconductors; it does not. It designs and manufactures the lithography machines that are an essential component in microchip manufacture and is therefore indispensable within the wider supply chain. Customers include TSMC, Samsung and Intel.
In its Q1 results, the semiconductor stock delivered €7.7 billion in net sales which was in line with guidance, and gross margin reached 54% which exceeded its original guidance.
The company expects to grow throughout 2025 and 2026, with AI remaining a key driver of growth. However, uncertainty around recent tariff announcements may impact ASML’s growth.
Market cap: 2.5 billion
Allegro MicroSystems
Although it has a smaller market cap than the other stocks, Allegro MicroSystems is seen to have good growth potential. The company are responsible for designing and manufacturing sensor and power integrated circuits which enable energy saving technologies and automation within the automobile industry.
The company reported strong Q3 results bringing in $178 million in sales, towards the upper end of market expectations. Strong sales in its medical and data centre segments were able to help minimise losses caused reduced demand in its automotive segment.
Allegro MicroSystems continues to develop new products across all segment areas. Key products include technology that’s now used for motors in data centres as well as smart home gadgets like lighting or thermostats and medical equipment. These developments could help drive future growth.
Market capitalisation: $3 billion
How to trade in semiconductor shares with us
- Learn more about semiconductor shares
- Create an account through our online platform
- Select your opportunity
- Choose your position size and manage your risk
- Place your deal and monitor your position
You can trade to benefit from small market movements with leverage. Leverage allows you to place a position far greater than your initial deposit which can magnify profit and loss. Whilst negative balance protection prevents you from losing more than your deposit market movements can be unpredictable and you could lose your full deposit.
Learn more about the differences between trading and investing here.
Top semiconductor stocks summed up
Given the increased adoption of AI, which is only expected to accelerate, the demand for powerful semiconductors is expected to rise and semiconductor stocks could perform very well. Despite this, potential tariffs could pose challenges for these companies.
Nvidia, Broadcom, Taiwan Semiconductor Manufacturing Company, ASML are some the best performing semiconductor stocks based on market cap. Whilst slightly smaller, Allegro MicroSystems has growth potential.
These are just a selection of some of the best semiconductor stocks available. Always do your research and remember past performance is not a guide for future returns.
Trade and invest in over 17,000 UK, US and global shares from zero commission with us, the UK’s No.1 trading provider.
* Learn more about trading or investing in shares with us or open an account to get started today.
*Based on revenue excluding FX (published financial statements, October 2021).
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
