The chip rally this year has been very strong, the question as we head into summer is can it continue? The semiconductor index, or SOX, is up an impressive 18.3% year to date, and has only closed down in five of the past 25 trading sessions. In the past, the summer months have not been that good to the chip sector. Over the past five years, during the months of May to August, the SOX has, on average, has been down 4.8%.

In a new report from RBC, the analysts admit that many investors and traders are gun-shy and have their fingers on the proverbial triggers or sell buttons when earnings or other data hit the tape. They still are very positive on five top stocks to own that they think have a minimum of 20% upside from here. Investors looking for solid upside potential from stocks that are not runaway momentum names, may want to review the top names to buy in China that we recently covered.

All five of the stocks are rated Overweight at RBC.

Avago Technologies Ltd. (NASDAQ: AVGO) not only gets a huge chunk of its business from Apple, but it is a big provider in the cloud/hyperscale data center and networking segment. The company supplies Cisco Systems with application-specific integrated circuits for a variety of high-end gear. It also indirectly sells into Scientific Atlanta by supplying integrated circuits for disk drives that end up in DVRs. Investors are paid a 1.6% dividend. The RBC price target for this top name is $87. The Thomson/First Call consensus price target is $79.80. Avago closed Wednesday at $71.64, so a move to the RBC target would be a 22% gain.

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Freescale Semiconductor Ltd. (NYSE: FSL) is a global leader in embedded processing solutions, providing industry leading products that are advancing the automotive, consumer, industrial and networking markets — from microprocessors and microcontrollers to sensors, analog integrated circuits and connectivity. Some 45% of the company’s business is generated through the automotive industry, making the connected car a huge earnings contributor. The RBC price objective for the stock is $30, and the consensus target is at $27.67. The stock closed Wednesday at $23.38. Trading to the RBC target would be a 23% gain.

Marvell Technology Group Ltd. (NASDAQ: MRVL) is the tech stock investors have waited on for years for its ship to come in. The key to Marvell’s success is that it is gaining market share at Western Digital, and the advent of SSDs has turned out to be a solid catalyst. In addition, hard disk drives are also being used for non-PC applications such as server storage and data centers. Marvell enjoys a 50% share of Western Digital’s enterprise business, which is significant. Investors are paid a 1.7% dividend. RBC has a $23 price target, and the consensus number is $16.71. Marvell closed trading Wednesday at $14.49. A jump to the RBC target would be a gain of more than 50%.

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Micron Technology Inc. (NASDAQ: MU) is a top technology name that trades at a very low 9.7 times estimated 2014 earnings. The company is a leader in DRAM chip sales and is one of the top Wall Street memory picks. With the bar set very high, the stock again delivered numbers that Wall Street applauded. With demand for memory chips expected to increase steadily over the next five years, with Micron estimating 20% to 30% yearly increases in DRAM demand, and 30% to 40% increases for NAND, the future looks very bright for this top name to buy. The RBC price target is $38, and the consensus target is $38.15. Micron closed Wednesday at $32.34. Trading to the target would be just short of a 20% gain after Wednesday’s move.

NVIDIA Corp. (NASDAQ: NVDA) remains Silicon Valley’s top graphics chip company, and many on Wall Street see the stock having the ability to soar over the next year. RBC cautions in its report that it would be looking for perhaps a better entry point. The company has been able to use its ability to leverage past investments, with a more controlled spending structure ahead, which enables strong cash flow that is allowing a focus on capital return. That is currently estimated to be $1 billion next year. The company makes the processor that powers the high-resolution 17-inch screen going into the very hot Tesla Model S. Investors receive a 1.8% dividend. The RBC price target is $26, while the consensus target is $19.13. NVIDIA closed Wednesday at $18.61. Shares trading at the RBC target would bring investors a 39% gain.

The RBC team stresses that Wall Street reaction to second-quarter earnings reports may be critical to keep the chip party going. Investors owning or thinking of adding these names will want to keep a close watch on earnings releases and guidance from these and other chip companies for the rest of the year.

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