6 Semiconductor Stock Picks to Buy to Ride the AI Investing Wave

If you've followed the stock market in recent weeks, you've surely heard about Nvidia's astronomical rise. Shares were already up more than 100% for the year before blockbuster earnings and a big guidance boost catalyzed another leg higher. The stock has now returned more than 170% in 2023.

And it's not just Nvidia. Meta stock has more than doubled year-to-date, while Microsoft and Alphabet have climbed roughly 40% apiece.

Investors have taken note and are trying to ride the wave higher, pouring a record $8.5 billion into AI tech funds last week alone. Considering Goldman Sachs recently forecasted that AI advances will add $7 trillion to annual global GDP over the next 10 years, it's hard to blame them for trying to get a piece of the action.

Further upstream from these AI pioneers — and also offering stock gains — are the semiconductor companies that actually produce the chips that power these assorted technologies. It's a part of the market that doesn't get the flashy headlines that Nvidia might, but still has seen billions in market value created as the AI revolution has driven demand.

Analysts at Bernstein led by Mark Li recently published a list of companies that make up the semiconductor universe, each equipped with a current price target and rating. Detailed below are the six stocks the firm currently have assigned an "overweight" rating, with a price target above current levels. They're ordered in increasing order of price-target upside.

(Note: For foreign-listed stocks that have ADRs, pricing is listed in US dollar terms.)

Ticker: TSM

Rating: Outperform

Price target: $113

Upside from June 1 close: 2.9%

Source: Bernstein

Ticker: SMSN.LI

Rating: Outperform

Price target: $1,417

Upside from June 1 close: 5.0%

Source: Bernstein

Ticker: ASML

Rating: Outperform

Price target: $810

Upside from June 1 close: 12.0%

Source: Bernstein

Ticker: AMAT

Rating: Outperform

Price target: $150

Upside from June 1 close: 12.5%

Source: Bernstein

Ticker: MU

Rating: Outperform

Price target: $80

Upside from June 1 close: 17.3%

Source: Bernstein

Ticker: NVDA

Rating: Outperform

Price target: $475

Upside from June 1 close: 25.5%

Source: Bernstein

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