Investing in Microchip Stocks

By Rachel Warren – Updated Oct 14, 2025 at 6:26 PM | Fact-checked by Frank Bass

Key Points

Global microchip demand will exceed $1 trillion soon, powering diverse sectors like autos and AI.
Investors should focus on continuous industry growth, despite year-to-year sales volatility.
Consider diversifying investment across key players like Nvidia, TSMC, and Broadcom for long-term gains.

Microchip companies design and manufacture the basic components that make up computing systems. Microchip businesses are part of the technology sector, but they are also advanced engineering and manufacturing companies. As chips proliferate throughout all sectors of the economy, the producers of these basic tech building blocks are an increasingly important part of daily life around the globe.

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Person holding microchip electronic technology. — Image source: Getty Images.

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Ticker Information Table
Name and ticker	Market cap	Dividend yield	Industry
Nvidia (NASDAQ:NVDA)	$4.9 trillion	0.02%	Semiconductors and Semiconductor Equipment
Taiwan Semiconductor Manufacturing (NYSE:TSM)	$1.6 trillion	0.96%	Semiconductors and Semiconductor Equipment
Broadcom (NASDAQ:AVGO)	$1.8 trillion	0.63%	Semiconductors and Semiconductor Equipment
ASML (NASDAQ:ASML)	$407.9 billion	0.68%	Semiconductors and Semiconductor Equipment
Qualcomm (NASDAQ:QCOM)	$195.3 billion	1.92%	Semiconductors and Semiconductor Equipment
Advanced Micro Devices (NASDAQ:AMD)	$418.7 billion	0.00%	Semiconductors and Semiconductor Equipment
Applied Materials (NASDAQ:AMAT)	$181.3 billion	0.76%	Semiconductors and Semiconductor Equipment
Rambus (NASDAQ:RMBS)	$11.2 billion	0.00%	Semiconductors and Semiconductor Equipment
Coherent (NYSE:COHR)	$20.9 billion	0.00%	Electronic Equipment, Instruments and Components
Lattice Semiconductor (NASDAQ:LSCC)	$9.8 billion	0.00%	Semiconductors and Semiconductor Equipment

Data as of Oct 29, 2025.

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NASDAQ: NVDA

Nvidia

Today's Change

(3.37%) $6.78

Current Price

$207.81

Key Data Points

Market Cap

$4885B

Day's Range

$204.78 - $212.16

52wk Range

$86.62 - $212.16

Volume

9.8M

Avg Vol

176M

Gross Margin

69.85%

Dividend Yield

0.00%

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However, Nvidia has spurred a revolution in computing by extending the usefulness of GPUs beyond games. Nvidia hardware now powers artificial intelligence (AI) for businesses via its data center chip designs, including generative AI services like ChatGPT. Data centers are now its largest segment by revenue.

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Artificial Intelligence

Artificial intelligence is the use of machines to mimic human intelligence.

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The company has pushed its technology even further and is powering devices with computing intelligence.
This includes robotics in factories and warehouses, self-driving car features for automakers, and medical devices and research.
More than just a microchip company, Nvidia made a big foray into software, with cloud subscription services that enable AI-fueled applications built atop its leading GPU business.

Nvidia is a premium-priced stock among its chip peers, and for good reason. It is one of the most promising companies in the AI computing movement.

2. Taiwan Semiconductor

Slowly but surely, Taiwan Semiconductor has built itself into the world's largest manufacturer of microchips. It took the crown from Intel (INTC +0.08%) a number of years back, and steady investment in increasingly advanced chip fab capabilities has paid off.

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NYSE: TSM

Taiwan Semiconductor Manufacturing

Today's Change

(1.28%) $3.85

Current Price

$305.38

Key Data Points

Market Cap

$1564B

Day's Range

$302.40 - $307.95

52wk Range

$134.25 - $311.37

Volume

585K

Avg Vol

12M

Gross Margin

58.06%

Dividend Yield

0.01%

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Its fabs, most of which are in Taiwan (though a number are elsewhere, including in the U.S.), can handle the most complex chip designs (like those for the Apple (AAPL -0.36%) iPhone and Nvidia's data center chips).
Taiwan Semiconductor boasts more than half of the total market share of advanced microchip fabrication.
As a manufacturing giant, Taiwan Semiconductor would normally be considered a highly cyclical stock.
Many manufacturers, including fellow chip fabs, are prone to ebbs and flows in sales from year to year.
Taiwan Semiconductor's constant investment in new and advanced production has kept demand steadily rising for years.

Taiwan Semiconductor is actively working to maintain its production prowess. It also pays a modest dividend to shareholders. If you're looking for a long-term play on microchip expansion, Taiwan Semiconductor is a good place to start.

3. Broadcom

Broadcom is not a household name. However, the chip giant is quietly helping to power everything from 5G mobile network development to data centers and industrial equipment. As its name suggests, it supplies a broad range of communications parts and components that companies need across many sectors of the economy.

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NASDAQ: AVGO

Broadcom

Today's Change

(2.94%) $10.98

Current Price

$383.95

Key Data Points

Market Cap

$1761B

Day's Range

$373.19 - $384.39

52wk Range

$138.10 - $384.39

Volume

716K

Avg Vol

23M

Gross Margin

63.13%

Dividend Yield

0.01%

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Although Broadcom is not the highest-growth chip business on this list, it has expanded slowly and steadily for years.
What it lacks in high-octane growth, it more than makes up for in profitability.
The company generated a whopping free cash flow profit of approximately $19 billion in its fiscal 2024.
Acquisitions have been key to Broadcom achieving this profitability.

Broadcom also has a policy of returning about half of the free cash flow it generated the previous year to shareholders via dividends, and it supplements dividends with share repurchases.

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Did You Know...

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4. ASML

Chip fabs, such as Taiwan Semiconductor, Intel, and Samsung (OTC:SSNL.F), are constantly in need of advanced equipment to manufacture the chips. One of the largest such industrial machinery makers (as measured by market cap) is Netherlands-based ASML.

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NASDAQ: ASML

ASML

Today's Change

(2.31%) $24.25

Current Price

$1074.87

Key Data Points

Market Cap

$408B

Day's Range

$1064.57 - $1077.80

52wk Range

$578.51 - $1077.80

Volume

74K

Avg Vol

1.6M

Gross Margin

52.70%

Dividend Yield

0.01%

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Few people have heard of ASML, but its most advanced equipment is responsible for forming the smallest of features on the world's most powerful microchips.

ASML makes EUV (extreme ultraviolet) lithography machines, and its flagship machines fetch more than $200 million each.
Due to its critical position in the semiconductor ecosystem, ASML has put up fantastic growth for years and is highly profitable.
The result has been a fantastic chip investment that has steadily increased both its share price and dividend payout for almost two decades.

If you love dividend stocks that consistently increase their payout, ASML Holding is a great semiconductor stock to consider.

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NASDAQ: QCOM

Qualcomm

Today's Change

(-1.16%) $-2.10

Current Price

$178.93

Key Data Points

Market Cap

$195B

Day's Range

$178.20 - $183.48

52wk Range

$120.80 - $205.95

Volume

409K

Avg Vol

9.2M

Gross Margin

55.68%

Dividend Yield

0.02%

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Almost every mobile phone on the planet has a piece of Qualcomm silicon in it.
Qualcomm has diversified its business in recent years, designing parts for network equipment used to create mobile signals, as well as industrial devices and connected home appliances, virtual reality headsets, and a fast-growing automotive technology segment.
Each of the new businesses will also benefit from new 5G networks.

Qualcomm has a tight grip on the global mobile market, and it's using its strength to expand its scope of work. As it does so, the company is finding new ways to eventually rekindle its revenue growth. Qualcomm is nonetheless an established leader in new areas of mobile connectivity.

6. Advanced Micro Devices

Advanced Micro Devices, known as AMD, has historically played second fiddle to Intel. But back in 2010, AMD offloaded its chip fab segment -- now known as GlobalFoundries (GFS -0.92%) -- to focus solely on chip design. The move has paid off. Although AMD is still far smaller than Intel, it has been picking up serious market share in both the data center and personal computing spaces.

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NASDAQ: AMD

Advanced Micro Devices

Today's Change

(2.33%) $6.01

Current Price

$264.02

Key Data Points

Market Cap

$419B

Day's Range

$257.42 - $267.02

52wk Range

$76.48 - $267.02

Volume

1.5M

Avg Vol

63M

Gross Margin

43.20%

Dividend Yield

N/A

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Data centers, the basic computing units of the cloud, have been an especially lucrative market for AMD.
Central processing units (CPUs), an integral part of data centers, are in increasing demand, as remote work has become more common and services delivered via the internet have become routine.
AMD has won over lots of customers with its leading microchip designs, both benefiting from a secular growth industry and taking market share from long-time rival Intel.

As it has grown, AMD has also become more efficient. Just a few years ago, the company still struggled during slow years and would frequently report steep operating losses. But the new AMD is proving to be far more profitable. Its megamerger with Xilinx created a floor for profitability, giving AMD room to invest more aggressively in research and development (R&D).

7. Applied Materials

As one of the oldest names in the semiconductor industry, Applied Materials has a deep understanding of microchips, how they're made, the materials used to produce them, and their role in an overall computing system.

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NASDAQ: AMAT

Applied Materials

Today's Change

(4.02%) $9.15

Current Price

$236.79

Key Data Points

Market Cap

$181B

Day's Range

$232.00 - $237.38

52wk Range

$123.74 - $237.38

Volume

222K

Avg Vol

8.3M

Gross Margin

48.50%

Dividend Yield

0.01%

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Its understanding of microchips has helped Applied Materials become one of the top developers of equipment that chip fabs need to manufacture microchips and other electrical components.

Chip fab equipment has been consolidated into a few major companies over the years.
Lam Research (LRCX +3.41%) and KLA Corp (KLAC +3.63%) are two other major players.
When a chip manufacturer announces plans to update or expand a plant or break ground on a brand-new one, it's almost certain that Applied Materials will be selling them some equipment.
The company also has a sizable recurring revenue stream from ongoing service to equipment purchased by customers.

Thanks to industry consolidation, Applied's business model has become far less cyclical than in times past. The company's stock looks like a good way to invest in microchip fabrication growth in the coming years.

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NASDAQ: RMBS

Rambus

Today's Change

(8.65%) $8.97

Current Price

$112.69

Key Data Points

Market Cap

$11B

Day's Range

$104.97 - $113.22

52wk Range

$40.12 - $114.55

Volume

2.2M

Avg Vol

2.1M

Gross Margin

81.10%

Dividend Yield

N/A

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Rambus' products are used to increase data bandwidth and capacity, protect sensitive data, and address the bottlenecks between processing and memory in modern computing systems.
Rambus makes money through both direct product sales of its chips and the licensing of its patented IP to other chip manufacturers and system designers.
Its key IP licensing partners include companies such as SK Hynix (KOSE:A000660), Micron (MU +2.91%), AMD, and Nvidia.

Rambus had an excellent year in 2024. It delivered record total revenue of $556.6 million, up 21% from 2023, and record annual cash from operations of $230.6 million, an 18% bump from one year ago.

9. Coherent

Coherent (COHR +3.84%) makes money by manufacturing and selling a broad range of laser products, optical components, and materials used in various markets, including data centers, consumer electronics, industrial applications, and aerospace and defense.

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NYSE: COHR

Coherent

Today's Change

(3.84%) $5.16

Current Price

$139.40

Key Data Points

Market Cap

$21B

Day's Range

$135.60 - $141.34

52wk Range

$45.58 - $141.34

Volume

159K

Avg Vol

4.2M

Gross Margin

36.08%

Dividend Yield

N/A

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Coherent is an essential supplier to the semiconductor industry because it provides the technology and materials used to manufacture, test, and package advanced chips.
For example, Coherent is a major supplier of optics for the high-power lasers used in EUV lithography. This technology is critical for manufacturing the most advanced chips with ever-smaller features.
The company develops and manufactures specialized composite materials, such as reaction-bonded silicon carbide, which is used for structural components in semiconductor capital equipment.
Coherent is also a vertically integrated supplier of datacom transceivers for data centers, including silicon photonics and other components.

The company reported record revenue of $5.81 billion in its fiscal 2025, a 23% year-over-year increase from its prior fiscal year.

10. Lattice Semiconductor

Lattice Semiconductor develops low-power, small-form-factor, field-programmable gate arrays (FPGAs) and related software tools.

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NASDAQ: LSCC

Lattice Semiconductor

Today's Change

(2.44%) $1.75

Current Price

$73.59

Key Data Points

Market Cap

$10B

Day's Range

$71.96 - $76.06

52wk Range

$34.69 - $76.61

Volume

Avg Vol

2.4M

Gross Margin

58.95%

Dividend Yield

N/A

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About the Author

Rachel Warren is a contributing Motley Fool stock market analyst covering pharmaceuticals, biotechnology, medical devices, information technology, and consumer goods. Prior to The Motley Fool, Rachel was a paralegal and legal administrator. She holds a bachelor’s degree in paralegal studies from Liberty University School of Law.

TMFRachelW

Rachel Warren has positions in Apple. The Motley Fool has positions in and recommends ASML, Advanced Micro Devices, Apple, Applied Materials, Intel, Lam Research, Nvidia, Qualcomm, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom and Coherent and recommends the following options: short November 2025 $21 puts on Intel. The Motley Fool has a disclosure policy.

Pros and cons of investing in microchip stocks

If you want to invest in microchip stocks, it's important to weigh the pros and cons before you put money to work.

Pros

Integral to modern technology: Microchips are the fundamental components in almost all modern electronics, from smartphones and computers to electric vehicles and medical equipment. This makes them essential to the global economy and positions the industry for sustained growth.

Driven by emerging technologies: The increasing demand for advanced technologies, such as AI, 5G, high-performance computing, and the Internet of Things (IoT), will continue to drive growth for the semiconductor industry.

High barriers to entry: The massive capital requirements, significant R&D costs, and specialized expertise needed to produce advanced chips create a high barrier to entry.

Cons

At the same time, there are some downsides to consider and to factor into your overall risk thesis as you consider an investment in this sector.

High volatility and cyclicality: The semiconductor industry experiences cycles of boom and bust, with demand fluctuating due to global economic conditions, technological shifts, and supply-and-demand imbalances. This volatility can lead to significant price swings.

Intense competition: The market is fiercely competitive, forcing companies to innovate constantly to produce smaller, faster, and more efficient chips. Failure to keep up with these technological advancements can lead to lost market share and revenues.

High capital expenditure and complexity: Chip manufacturing is extremely expensive and requires constant large-scale investments in manufacturing facilities and R&D. This creates cost pressures, and a few missteps in predicting demand can lead to costly inventory issues.

Investing in Microchip Stocks

Key Points

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2. Taiwan Semiconductor

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3. Broadcom

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4. ASML

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6. Advanced Micro Devices

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7. Applied Materials

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9. Coherent

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10. Lattice Semiconductor

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