Which Semiconductor Companies Are Leading the Charge in Today's Tech Rally?

The semiconductor sector has transformed into one of the most dynamic investment landscapes of 2024. Global semiconductor sales hit $149.9 billion in Q2 2024, up 18.3% year-over-year, with analysts projecting the market to reach $588 billion by year-end—a 13% jump from 2023. This explosive growth stems from artificial intelligence adoption, data center infrastructure expansion, and cloud computing demands reshaping the entire technology ecosystem.

Within this thriving market, three semiconductor companies have emerged as particularly compelling stories: ARM Holdings, NVIDIA, and Broadcom. Each represents a different angle on the chip industry’s future, from architecture licensing to GPU dominance to infrastructure solutions.

ARM Holdings: The Licensing Model Disrupting Silicon Design

ARM Holdings has quietly built one of the most valuable positions in the semiconductor supply chain. The company doesn’t manufacture chips—instead, it designs CPU architectures that power countless devices worldwide, generating revenue through licensing agreements and royalties.

The numbers tell a remarkable story. ARM’s stock has climbed nearly 95% year-to-date and soared 168.9% over the trailing twelve months. The company boasts a market cap around $150.2 billion, reflecting investor confidence in its growth trajectory. In fiscal Q1, ARM delivered record revenue of $939 million, a 39% year-over-year increase. License revenue specifically jumped 72% to $472 million, driven by AI infrastructure demand—a critical metric showing how central the company has become to AI chip development.

Where ARM is particularly interesting is its strategic pivot beyond mobile. Historically, ARM architecture powered smartphones, but the company is now aggressively competing in AI processor design, cloud computing, automotive systems, and IoT applications. This diversification reduces dependency on smartphone cycles while positioning ARM as essential infrastructure for the AI era.

Valuation-wise, ARM trades at a forward P/E of 92.50—the highest among the three semiconductors companies examined here. However, analysts largely justify this premium through projected earnings growth. Out of 27 covering analysts, 17 recommend “strong buy,” 1 suggests “moderate buy,” and 9 say “hold,” with an average price target of $138.18.

NVIDIA: The Undisputed GPU Market Champion

If ARM represents architecture, NVIDIA represents execution at scale. The company has become the de facto standard for AI computing, graphics processing, and data center solutions.

NVIDIA’s market dominance is staggering. The stock has delivered a 149.4% year-to-date return with a 192.5% fifty-two-week gain. The company now commands a $2.97 trillion market capitalization, making it one of the world’s most valuable corporations. In Q2 2024, NVIDIA reported record quarterly revenue of $30 billion—a 122% surge from the prior year—while maintaining strong profitability with GAAP earnings per diluted share of $0.67.

The engine driving this performance is NVIDIA’s commanding 88% share of the GPU market. Essentially, if you’re building AI infrastructure, you’re almost certainly using NVIDIA chips. Looking ahead, management projects Q3 revenue of $32.5 billion with gross margins in the mid-70% range, signaling robust demand visibility.

From a valuation perspective, NVIDIA’s forward P/E of 44.66 might appear elevated, but investors are willing to pay this premium given the company’s market dominance and the secular growth in AI deployment. Analyst sentiment is overwhelmingly bullish: 35 of 40 analysts rate the stock “strong buy,” 2 recommend “moderate buy,” and 3 suggest “hold.” The average price target of $149.49 implies approximately 21% additional upside from current levels.

Broadcom: The Infrastructure Enabler Building AI Scaling

Broadcom operates as a different breed of semiconductor player—designing and providing the infrastructure components that actually move data and power enterprise systems. The company serves wireless communications, enterprise storage, industrial applications, and increasingly, AI infrastructure.

Broadcom stock has performed solidly, returning 57.2% year-to-date and 110.5% over the past fifty-two weeks, reflecting steady investor recognition. The company’s market cap stands around $813.8 billion, significantly larger than ARM but smaller than NVIDIA. Notably, Broadcom also pays investors a 1.22% dividend yield ($0.53 per share quarterly), offering a modest income component alongside capital appreciation.

Financial performance has been impressive. In fiscal Q3 2024, Broadcom reported $13.07 billion in revenue—a 47% increase—with adjusted EBITDA reaching $8.22 billion (63% of revenue). The AI semiconductor opportunity and VMware acquisition integration are driving much of this growth. Management guided fourth-quarter revenue to approximately $14 billion, indicating the momentum continues.

Recent product launches underscore Broadcom’s strategic positioning. The company released Rally Anywhere, addressing organizations requiring strict data sovereignty, alongside VMware Tanzu Platform 10 and new AI solutions—moves that align Broadcom with enterprise AI adoption trends.

Broadcom’s valuation reflects a middle ground: the forward P/E of 36.04 sits between ARM’s premium and NVIDIA’s, while remaining accessible relative to growth prospects. Analyst consensus is decisively positive, with 30 of 33 covering analysts recommending “strong buy” and 3 suggesting “hold.” The $192 average price target implies 9.4% upside potential.

The Broader Industry Context

These three companies represent different exposure paths to semiconductor industry growth. ARM offers pure architectural leverage, NVIDIA provides direct AI computing dominance, and Broadcom delivers infrastructure scaling solutions. Together, they illustrate how diversified the semiconductor opportunity has become—it’s not simply about one company or technology, but an entire ecosystem reshaping around artificial intelligence and advanced computing.

The semiconductor sector’s 18% growth in 2024 and projected 13% full-year expansion reflects structural, not cyclical, tailwinds. As AI implementation deepens across industries—from cloud providers to automotive manufacturers to enterprise software companies—demand for silicon, processing power, and supporting infrastructure should remain robust.

Each of these companies offers distinct risk-reward profiles and market positions. Investors evaluating semiconductor exposure should consider how each fits their portfolio strategy and risk tolerance. What’s clear is that this sector continues attracting serious institutional capital and analyst attention for good reason.