The semiconductor industries have had an extremely strong year and may be setting up for a very impressive 2016, as the potential for new design and innovation combined with ongoing mergers and acquisitions activity should keep the top companies front and center.

A new Canaccord Genuity research report notes that the upcoming 25th annual ARM TechCon industry conference starts Tuesday. An ARM processor is one of a family of CPUs based on the RISC (reduced instruction set computer) architecture developed by Advanced RISC Machines, better known as ARM Holdings. The conference has combined activities for chip designers, system implementation engineers and software developers to share and discuss the development and optimization of future ARM-based embedded products. New company information and meetings with top executives will be a high priority.

Canaccord Genuity is currently very positive on some of the top chip companies that will be attending, and highlight four stocks in its report that are rated Buy.

ARM Holdings

This top company is at the forefront of the conference and licenses the chip designs and the ARM instruction set architectures to third parties, who design their own products that implement one of those architectures. ARM Holdings PLC (NASDAQ: ARMH) enables the development of new markets and transformation of industries and society, invisibly creating opportunity for a globally connected population. Its scalable, energy-efficient processor designs and related technologies deliver intelligence wherever computing happens, ranging from sensors to servers, including smartphones, tablets, digital TVs, enterprise infrastructure and the Internet of Things.

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The Canaccord team is anxious to get updates on the following: potential licensable networking focused processes, more color on the trends that led ARM to raise networking and server market shares targets for 2020, and the potential for mbed server monetization for Internet of things applications.

ARM investors receive a small 0.7% dividend. The Canaccord price target for the stock is $60. The Thomson/First Call consensus target is $56.73. Shares were trading at $47.85 Monday.

Ambarella

This company specializes in video applications. Ambarella Inc. (NASDAQ: AMBA) develops semiconductor processing solutions for video that enable high-definition (HD) video capture, sharing and display. Its solutions enable the creation of video content for wearable sports cameras, automotive aftermarket cameras, Internet protocol (IP) security cameras, digital still cameras, telepresence cameras and camcorders in the camera market, and they manage IP video traffic, broadcast encoding and IP video delivery applications in the infrastructure market.

While nagging investor fears of competition have hovered over the company, Canaccord meets with the CEO Tuesday and will look to glean insights on everything from how the company will compete with chips from Qualcomm to what metrics are the most important to help set the company apart including power, compression efficiency, memory bandwidth and analytics.

The Canaccord price target $100, and the consensus target is $96.80. Shares were last seen at $56.09, up over 3%.

Applied Micro Circuits

This is a lower-priced small cap company that could provide some solid upside potential. Applied Micro Circuits Corp. (NASDAQ: AMCC) provides silicon solutions for next-generation cloud infrastructure and data centers, as well as connectivity products for edge, metro and long haul communications equipment in the United States and internationally.

The company offers X-Gene, a server on a chip product for use in cloud data center, computing and enterprise applications, and embedded computing products that are applied in control- and data-plane management, wireless access points, residential gateways, wireless base stations, storage controllers, network attached storage, network switches and routing products, and multi-function printers.

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Canaccord expects new benchmarking demonstrations of X-Gene server chips versus Xeon E5, as well as an update on the 16 nanometer X-Gene3 parts just back from foundry at TechCon. Applied Micro is also a company that often surfaces in potential takeover talk.

While the Canaccord price target is $10, the consensus price objective is lower at $9. The stock was trading at $7.12 just before midday.

Cavium

This has been a Wall Street favorite for some time, and it could be another great addition to tech portfolios. Cavium Inc. (NASDAQ: CAVM) generates a sizable part of the its revenue from the association it has with Cisco Systems with security and multi-core embedded processors. Wall Street analysts see the company well positioned with multi-core processor portfolio and design wins in enterprise and service provider markets.

Canaccord cites the fact that Cavium is expected to have five new products that will contribute to earnings next year. At meetings with company executives at the conference, the firm will ask how the company’s Thunder X server chips are faring against Intel. It also will be checking how the company’s Xpliant switching silicon matches up with Broadcom.

The Canaccord price objective is $76, and the consensus target is $72.82. Shares were last seen at $70.97, down more than 3%.

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Needless to say, conventions can always be very positive for the top companies that participate, as analysts from around Wall Street update not only their thesis on the companies, but the data behind those theses. While these stocks are sector leaders, they are also only suitable for very aggressive risk-tolerant accounts.

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