Old-timers remember back before the turn of the century when semiconductor stocks often traded in a deeply cyclical nature. Back then, all eyes usually were on Intel and what new processor it was developing. That has all changed. With the automotive industry supplying huge demand, and high-function graphics chips for gaming consoles constantly being upgraded, the chip landscape is indeed a brave new world.

With 2021 right around the corner, many analysts are putting out their top picks for next year. Analyst William Stein covers the semiconductor space at Truist Securities, which is the combination of the former SunTrust Robinson Humphrey and BB&T. While he remains very positive on the top growth names, the top sector-leading cyclical and value companies are also in the mix for next year.

The following five top stocks are rated Buy at Truist Securities, but it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Top Growth Ideas

Monolithic Power Systems Inc. (NASDAQ: MPWR) is an off-the-radar play that was a favorite over the years at SunTrust. This small-cap pick designs, develops and markets integrated power semiconductor solutions and power delivery architectures for consumer, industrial, computing and storage, and communications market segments.

The company offers direct current (DC) to DC converter integrated circuits used to convert and control voltages of various electronic systems, such as portable electronic devices, wireless LAN access points, computers, monitors, automobiles and medical equipment.

The company also provides lighting control integrated circuits for backlighting that are used in systems, which provide the light source for LCD panels in notebook computers, monitors, car navigation systems and televisions, as well as for general illumination applications. In addition, it offers alternating current (AC)/DC offline solutions for lighting illumination applications and AC/DC power conversion solutions for various end products that plug into a wall outlet.

The Truist research report said this:

We view Monolithic Power as a unique asset in semis: As-mid cap diversified supplier in the early stages of a multi year structural growth & margin expansion, the company is in the early stages of transitioning from a semi device supplier to a broader solutions provider, boosting revenue & margins over time. Longer-term, we believe the culture of unencumbered innovation can drive 20% sales growth & high-20s earnings-per-share growth through the cycle, and great long-term investment returns

Investors receive just a 0.65% dividend. The Truist price target for the shares is $346, and the Wall Street consensus target is $350.78. The closing price on Friday was $306.95 per share.

Sector leader Nvidia Corp. (NASDAQ: NVDA) made a huge purchase last year that is proving to be a solid tailwind for the company. Though it rarely has grown through acquisitions, Nvidia bought Mellanox and paid a whopping $6.9 billion in cash in a deal that closed back in April. In what actually was somewhat of a duel, Nvidia knocked out Intel in its bid to buy the chipmaker, and the deal has helped Nvidia boost its business of making data center chips that help power cloud computing.

Mellanox’s BlueField intelligent network adapters are another version of data center co-processing acceleration. Top Wall Street analysts see the combination of Nvidia and Mellanox as a definite threat to Intel’s data center CPU dominance of workloads.

Nvidia recently outlined a $100 billion total addressable market for its data center business by 2024, or twice the $50 billion outlined at its last investor day. The upside includes $20 billion from core Mellanox networking, $10 billion from new class of data processing units and another $10 billion from the emerging edge AI EGX computing platform.

The analyst remains very positive:

We continue to believe the companys exposure to some of the most exciting areas of growth in tech (gaming / e-sports, autonomous driving, AI, and server acceleration) will drive well above industry growth over the next few years. We believe its competitive positioning derives less from its chips, and more from its software investment, culture of innovation, and ecosystem of incumbency.

Truist has a $623 price objective, well above the $572.84 consensus figure. Nvidia stock ended Friday at $531.88, and the company is slated to report quarterly results this week.