The Chip Boom Is Back: 3 Stocks Positioned for Huge Gains

Key Points

• The semiconductor sector rebounded sharply in November and continues to lead the market into year-end on accelerating AI demand.
• Credo Technology, Lam Research, and Taiwan Semiconductor each play a different but essential role in chip infrastructure, manufacturing or foundry production.
• AI-driven data center expansion, rising equipment needs, and advanced chip fabrication are fueling growth across these three companies.

As markets head toward year-end, the semiconductor sector continues to outpace broader indexes, powered by surging AI demand and a strong rally off November’s V-shaped bottom. In a recent conversation with MarketBeat, semiconductor expert Marc Chaikin shared his outlook for chips and highlighted three companies the Power Gauge currently favors based on its multi-factor ratings. For those interested in how these ratings are built, additional background is available through Marc’s research platform at the Power Gauge research page.

Marc noted that expectations for Fed rate cuts shifted sharply in November, sending stocks higher across large and small caps. “You had a spectacular rally in the market… and I think that’s going to continue into year-end,” he said.

Semiconductors remain a major driver of that strength. As Marc explained, “AI clearly has been up to now driving the market, and central to AI are semiconductors.”

Marc pointed to three companies that illustrate different parts of the semiconductor ecosystem and where demand is building most quickly.

Credo Technology: Riding the Data Center Build-Out

The first company Marc highlighted is Credo Technology NASDAQ: CRDO, which produces high-speed connectivity solutions used inside hyperscale data centers.

Credo’s components help advanced processors from NVIDIA NASDAQ: NVDA and Advanced Micro Devices NASDAQ: AMD operate more efficiently by enabling faster data movement.

“When you have all those processors… getting them to work together as one supercomputer is what Credo’s cables do,” Marc explained.

The company recently reported strong earnings, sending the stock sharply higher before it pulled back. That retracement caught Marc’s attention because customer demand remains strong. Management described ordering activity as “very, very aggressive,” driven by the rapid pace of the current data center expansion cycle.

One consideration is customer concentration: Amazon NASDAQ: AMZN accounts for more than half of Credo’s revenue. While hyperscaler spending remains elevated, a slowdown in cloud infrastructure investment would directly affect results.

Even so, Credo has maintained a bullish Power Gauge rating and continues to benefit from AI-related demand.

Lam Research: A Core Long-Term Semiconductor Investment

Marc’s second pick, Lam Research NASDAQ: LRCX, plays a critical role in the chip manufacturing process.

Lam produces the equipment used by foundries to fabricate semiconductor wafers—the foundation of every advanced chip.

“Lam Research makes the machines that are used to manufacture semiconductor chips,” Marc said, emphasizing the company’s importance within the ecosystem.

Lam was recently added to Marc’s Smart Money Trader portfolio after Chaikin Money Flow showed signs of sustained institutional accumulation. While the stock has performed well this year, Marc views it as a long-term holding: “As a long-term investment, Lam Research is indispensable to the semiconductor industry.”

Competition exists from peers such as Applied Materials NASDAQ: AMAT, but demand for fabrication equipment remains strong across AI, mobile devices and automotive technology.

Taiwan Semiconductor: The Global Leader in Chip Manufacturing

The third company on Marc’s list is Taiwan Semiconductor NYSE: TSM, the world’s largest contract semiconductor manufacturer.

TSMC produces leading-edge chips for companies including Apple NASDAQ: AAPL, NVIDIA, AMD and Qualcomm NASDAQ: QCOM.

“Taiwan makes the chips,” Marc said. “They make them for NVIDIA, AMD, Apple—you name it.”

Despite that central role, the stock receives less analyst coverage than one might expect for a trillion-dollar company. Marc attributes this to the perception that TSMC is more of a manufacturing partner than a chip innovator. Still, with management projecting revenue growth of roughly 35% over the coming year, the company remains a key beneficiary of rising AI demand.

TSMC continues to expand its U.S. manufacturing footprint, which may help diversify its geographic exposure and reduce geopolitical risk tied to Taiwan’s proximity to China.

Credo Stands Out on Bridget’s Buys for Strength and Momentum

Of the three companies discussed, Credo Technology stands out on Bridget’s Buys for its earnings strength, strong demand signals and constructive Power Gauge rating. The recent pullback provides a more favorable entry point following its post-earnings spike.

Marc supported the pick, noting that Wall Street recently raised price targets on the company: “Any time you have analysts raising their estimates, raising their price targets, you’ve got the wind at your back.”

Credo, Lam Research, and Taiwan Semiconductor each serve a different—but essential—role in the semiconductor landscape. Together, they offer a diversified view of the sector as AI adoption accelerates across industries.