Demand for semiconductors has been steadily increasing, driving higher sales and revenues for chipmakers. The excitement around artificial intelligence (AI), particularly generative AI, has significantly boosted sales over the past few years, benefiting the broader semiconductor market. The industry is set for continued growth in the coming months, evidenced by strong sales over the last three quarters and several recent deals by AI-focused companies, reinforcing investor confidence in semiconductor stocks powering the AI revolution. Given this favorable outlook, investing in semiconductor stocks like Silicon Laboratories Inc. (SLAB), Analog Devices (ADI), NVIDIA Corporation (NVDA), ASML Holding N. V. (ASML), and Advanced Energy Industries, Inc. (AEIS)—all rated Zacks Rank #2 (Buy)—would be prudent. A full list of Zacks #1 Rank (Strong Buy) stocks is available for investors. **Semiconductor Sales on the Rise** Global semiconductor sales reached $208. 4 billion in Q3, a 15. 8% sequential increase, according to the Semiconductor Industry Association (SIA). September sales alone totaled $69. 5 billion, up 7% sequentially and 25. 1% from $55. 5 billion a year earlier. Robust demand across various products, especially memory and logic chips, powered this growth. By region, sales grew 8. 2% in the Americas, 8% in Asia Pacific/Other, and 6% in China in September. AI demand has been a key driver, with major tech companies investing heavily and attributing much of their revenue growth to AI-related businesses. **Massive AI Investments Boost Semiconductor Stocks** Last week, Amazon (AMZN) announced a $38 billion deal with OpenAI to expand AI operations on Amazon Web Services, involving millions of NVIDIA GPUs. Similarly, Microsoft (MSFT) partnered with IREN Limited in a $9. 7 billion deal to access NVIDIA’s GB300 GPUs. NVIDIA also revealed plans at its GTC conference to build AI supercomputers for the U. S. energy sector. Semiconductor sales grew rapidly in 2024, with Q2 sales hitting $179. 7 billion—a 7. 8% increase over Q1 and a strong follow-up to 2023’s $526. 8 billion total sales, up 19. 1% year-over-year. Analysts predict the semiconductor market will maintain double-digit growth through 2025, fueled by increasing AI investments. **Five Semiconductor Stocks with Strong Growth Potential** 1. **Silicon Laboratories Inc. (SLAB)** A leader in silicon, software, and solutions for IoT, infrastructure, industrial automation, consumer, and automotive markets, SLAB offers performance, energy efficiency, connectivity, and design simplicity. Its expected earnings growth for the year exceeds 100%, with earnings estimates improving 28. 6% in the last 60 days.

Zacks Rank: #2. 2. **Analog Devices (ADI)** Specializing in analog, mixed-signal, and DSP integrated circuits, ADI’s diverse product line includes amplifiers, converters, sensors, and power management ICs. Expected earnings growth stands at 21. 5%, with a slight 0. 4% earnings estimate upgrade recently. Zacks Rank: #2. 3. **NVIDIA Corporation (NVDA)** The inventor of GPUs, NVIDIA dominates visual computing and AI-based solutions for high-performance computing, gaming, and virtual reality. Expected earnings growth is 49. 2%, and estimates have seen a 0. 5% upgrade. Zacks Rank: #2. 4. **ASML Holding N. V. (ASML)** ASML leads in manufacturing advanced semiconductor technology systems and offers integrated portfolios for complex chip production. Expected earnings growth is 39. 7%, with a 3. 6% improvement in earnings estimates over 60 days. Zacks Rank: #2. 5. **Advanced Energy Industries, Inc. (AEIS)** A top supplier of power subsystems and process-control tech for semiconductors, AEIS focuses on power-conversion solutions and instrumentation for semiconductor and industrial markets. Expected earnings growth is 56. 1%, with a 1. 9% increase in estimates recently. Zacks Rank: #2. For the latest expert stock recommendations, you can download Zacks’ “7 Best Stocks for the Next 30 Days” report. This summary is based on an article originally published by Zacks Investment Research.