I have been paying close attention to opportunities in the semiconductor sector recently, discovering that this wave of AI has truly driven a surge in industry demand. I want to share some semiconductor stock recommendations worth ongoing observation.

First, let me share my understanding of this sector. Semiconductors are like the brains of the electronic world; without them, electronic products can only perform repetitive tasks. But with chips, information can be stored, transmitted, and applied. That’s why from Industry 4.0, cloud computing, 5G to new energy vehicles and electric cars, every field is driving chip demand. Especially after ChatGPT’s explosion in popularity, the industry’s development speed has noticeably accelerated.

The industry’s division of labor is actually quite detailed. Some companies follow the IDM model (like Samsung, Intel), designing and manufacturing in a vertically integrated manner, but requiring large scale and high management costs. There are also fabless pure design companies (Qualcomm, NVIDIA, Broadcom), which are asset-light but face market volatility. Then there’s foundry (TSMC), with the largest investment scale but also the easiest to form oligopoly. Equipment manufacturers (ASML, Applied Materials) need continuous large investments to maintain process leadership.

If I had to choose, I would focus on three directions: chip design, wafer manufacturing, and semiconductor equipment. These sectors tend to have “long slope, thick snow” characteristics, making it easier to capture structural opportunities.

From market capitalization and growth potential, several semiconductor stocks are recommended for long-term tracking. NVIDIA (NVDA) has become a focus due to AI, with TrendForce estimating GPU demand reaching up to 30k units, giving NVIDIA a clear advantage in this area. Texas Instruments (TXN) is the world’s largest analog chip manufacturer, with a broad moat and low product substitution risk. TSMC, as the leading wafer foundry, continues to benefit from industry upgrades.

Broadcom (AVGO) is strong in communication chips, with data centers and network solutions as core competencies. Qualcomm (QCOM), as the largest 5G baseband chip supplier, holds a 53% market share, with target markets expected to grow from the current $100 billion to $700 billion by 2030. AMD (AMD) has become a CPU growth dark horse in recent years, collaborating with giants like Microsoft and Apple.

On the equipment side, we shouldn’t overlook ASML, which holds an absolute monopoly in EUV lithography machines, being the only global supplier. Applied Materials (AMAT) is a leading provider of semiconductor manufacturing equipment, benefiting from demand in 5G, IoT, and AI fields. Lam Research (LRCX) mainly benefits from growth in storage, 5G, and AI demand. Micron Technology (MU) has a solid market share in DRAM and NAND flash memory. Intel (INTC), despite some recent setbacks, still maintains its position as a PC processor leader.

Regarding timing, I note that the semiconductor industry cycle usually lasts 4-5 years, with stock prices typically leading fundamentals by 3 to 6 months. The last full cycle started in the second half of 2019, peaked in October 2021, then experienced a correction, and bottomed out in 2023. A new upward cycle is clearly starting from 2024, driven by AI computing power demand and industry-wide price increases. Currently (May), we are in the middle to late stage of the cycle’s upward phase, with a long-term bullish trend established, but short-term momentum is overheated, and correction pressure is building.

So, now is not the time to deploy at the bottom, but rather to grasp structural opportunities as the trend confirms. You can use technical retracements or RSI oversold signals to enter gradually, while being cautious of monthly MACD downturns and geopolitical risks.

For short-term traders, the core is to use moving averages to protect profits. Buying signals can be when the stock price breaks above the 5-day moving average with a golden cross of the 5-day over the 10-day, or buying on dips near support levels. Selling can be based on RSI overbought divergence signals for partial profit-taking, or reducing positions when volume stagnates and the stock shows signs of topping.

Several factors influence subsequent stock prices. Downstream demand changes are the most direct drivers; shipment volumes in 5G, IoT, automotive electronics, and other fields are rapidly increasing. Inventory levels are also crucial—high inventories indicate weak demand, while low inventories suggest the opposite. Technological innovation determines corporate competitive advantages; diversification of AI chips, capacity increases in EUV lithography machines, etc., will all boost related companies’ stock prices.

It’s important to note that risks are also significant. Macroeconomic instability can impact corporate performance; in a rising interest rate environment, investment willingness declines. Fierce technological competition means falling behind could lead to elimination. Weakening consumer electronics demand, such as in smartphones and PCs, also poses risks; recovery in these areas still needs observation.

Overall, the core logic of semiconductor stock recommendations is to seize the major trend of AI and industry upgrading. Choosing leading companies across design, foundry, and equipment segments, and combining technical and fundamental analysis to grasp opportunities. The long-term outlook for this sector is certain, and short-term volatility is normal.