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By Larry Ramer, InvestorPlace
I believe that many chip makers may very well be about to embark on a huge, multi-decade boom. While there’s a great deal of focus on the large extent to which the advent of artificial intelligence is boosting chip makers’ financial results, the chip space has other extremely powerful, positive catalysts that are getting much less attention.
Specifically, the proliferation of autonomous robots and autonomous vehicles will greatly increase the demand for semiconductors in the coming years. In February, Bessemer Venture Partners wrote, “In the wake of artificial intelligence’s (AI) watershed 2023, we believe autonomous robotics is set to have its moment soon, too.”
Indeed, Tesla (NASDAQ:TSLA) CEO Elon Musk has said that his company’s autonomous robots could be ready to sell by the end of 2025, and such a development could very well be the sector’s “‘ChatGPT moment.” Regarding autonomous vehicles, autonomous truck software maker Aurora (NASDAQ:AUR) recently signed a major deal with Uber (NYSE:UBER). At the same time, China’s Baidu (NASDAQ:BIDU) continues to expand its robotaxi fleet rapidly.
Here are three chip stocks that, thanks to these trends, can rise tremendously over the long term.
Mobileye (MBLY)
Encouragingly, Mobileye (NASDAQ:MBLY), which sells chips that enable advanced driver assistance systems and autonomous driving, reported in April that it had obtained orders for 46 million of its EyeQ6 Lite assisted-driving chips. The firm plans to deliver those chips over the next few years. Since total global vehicle sales reached 92.4 million last year, the 46 million figure is quite impressive.
One of Mobileye’s key partners is Volkswagen (OTCMKTS:VLKAF). The German automaker, in turn, has invested heavily in two promising automakers: Rivian (NASDAQ:RIVN) and China’s Xpeng (NASDAQ:XPEV). Both companies’ deliveries are growing rapidly, and Xpeng is a leader in autonomous driving. Moreover, as I’ve noted in past columns, Rivian’s EVs almost always receive overwhelmingly positive reviews. Given these points, I expect Mobileye to obtain a lot of revenue from Xpeng and Rivian in the long term.
Also, Mobileye could very well start selling its chips to the makers of autonomous robots in the long term.
The market capitalization of MBLY stock is just $21.5 billion. Given its relatively low value and strong, positive catalysts, it can easily appreciate tremendously. This situation, along with the company’s strong, positive catalysts, makes it one of the best chip stocks to buy for long-term growth investors.
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Astera Labs (ALAB)
As I noted in a previous column, “Astera Labs (NASDAQ:ALAB) develops connectivity chips for cloud and artificial intelligence data centers.”
As a result, British bank Barclays has identified the company as a key beneficiary of the proliferation of AI. That makes sense since data centers are currently developing and deploying the lion’s share of the world’s AI.
However, Astera’s memory-enhancing products will also tremendously boost its growth over the longer term. That’s because AI, autonomous vehicles, and AI-powered robots use significant amounts of memory.
Indicating that Astera’s chips are becoming popular among data centers, the company’s revenue jumped 269.5% last quarter versus the same period a year earlier to $65.26 million.
ALAB stock’s market capitalization is just $8.8 billion, making it a great candidate among chip stocks that can multiply over the long term.
Navitas Semiconductor (NVTS)
Navitas Semiconductor (NASDAQ:NVTS) develops gallium nitride chips that deliver large amounts of electricity at fast speeds. SeekingAlpha columnist Fountainhead says these circuits are superior to competing offerings due to their “power consumption, performance, and sustainability.” These areas are extremely important in general and for data centers in particular, so I expect Navitas’ offerings to gain a great deal of market share over the longer term.
What’s more, Fountainhead reports that Navitas has a great deal of exposure to electric vehicles and consequently can benefit from “increasing electrification content in vehicles from ADAS (Advanced Driver Assist Systems), Robotaxis and the drive to complete autonomy.” Given the rapid proliferation of robotaxis and ADAs systems, I believe that Navitas is well-positioned to deliver rapid growth. As a result, I view the name as one of the best chip stocks to buy for long-term growth investors.
Indeed, Navitas reported that its top line had risen by an impressive 73.5% in Q1 compared to the same period a year earlier. The company stated that there was strong demand for its products in AI-based data centers and EVs.
Given the company’s low market capitalization of $841 million and its strong, positive catalysts, I believe the stock could easily soar dozens of times in the long term.
On the date of publication, Larry Ramer held long positions in RIVN, XPEV and AUR. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been SMCI, INTC, and MGM. You can reach him on Stocktwits at @larryramer.
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