In the bearish market conditions that brought stocks from all backgrounds to the ground, the tech sector had fallen quite significantly. With serious macroeconomic headwinds impacting the industry, and supply chain complications persisting in what seems indefinite, investors seem hesitant to take long positions. The semiconductor industry too has taken its fair share of a beating amid these uncertain circumstances. However, with the long-term promise this sector offers, we believe the mass selloff brings a unique opportunity for those with their sights set far to invest in the best semiconductors stocks.
As the world continues its transition to the digital realm, the hardware to power this rising phenomenon grows ever more critical. Semiconductor chips essentially act as the core unit of thousands of computing devices that continue to play an important role in all areas of life. Therefore, in light of this, we share our perspective on some of the most promising semiconductor stocks you could buy right now.
Navitas Semiconductor Corp
We begin our list of best semiconductor stocks with the highly promising and innovative, Navitas Semiconductor Corp. (NASDAQ: NVTS). This Irish company is at the forefront of a revolutionary breakthrough in the semiconductor space and is enjoying incredible growth levels as a result. Navitas was the first semiconductor player to develop gallium nitride components for use in the management of electrical power. This offers a dynamic shift from the more mainstream silicon-based components.
Through the use of gallium nitrate or GaN, the world could see the electric realm undergoing a dynamic transformation. Its use offers a number of core advantages. These include fewer components in electrical systems, reduced charging periods, reduced weight, higher efficiency, and far more reliable electrical usage. The result of this technology, which is already being used in millions of devices, would be a significant optimization of household appliance usage, solar power systems, data centers, and electric vehicles.
Given this immense promise of GaN technology, Navitas doubled its 2020 revenue of $11.8 million to almost $24 million in 2021. Analysts are confident that this will see a further doubling at the end of 2022. Given the sheer size of the electric market which is yet to integrate GaN into its systems, the upside potential appears to be almost limitless. NVTS, holds incredible promise, and should be the first choice for any investor looking to cash in on the semiconductor opportunity by investing in the best semiconductor stocks.
Advanced Micro Devices
Next up on our list is the market favorite, Advanced Micro Devices Inc. (NASDAQ: AMD). This incredible semiconductor company which is at the forefront of some of the world’s most critical domains has suddenly fallen back within the reach of ordinary investors. In just a six-month period, the stock has dropped from almost $120 to $100, despite rock-solid fundamentals, and an incredible growth opportunity.
AMD’s high-performance chip technology places the company as the industry’s undisputed leader. Its products play a critical role in healthcare, autonomous driving, and cloud-based systems, as well as in science and exploration. Given the rapid tech transition, which is likely to be seen, even in the developing world, organic growth prospects alone make the stock extremely attractive. In the first quarter of 2022, AMD recorded a record high revenue of $5.9 billion, which reflected an impressive 71% year-on-year growth.
However, the company has also been increasingly focusing on acquisition-based expansion to further strengthen its grip on the market. Its recent acquisition of Xilinx, the industry’s lead provider of FPGA integrated chips is a testament to this. As a result, not only does AMD enjoy product diversification and technology expansion, but also an additional stream of high-margin revenue. Similarly, the company also recently closed its acquisition of the network security champion, Pensando.
AMD is an extremely high potential stock in the semiconductor realm, and its robust market position significantly enhances its growth prospects.
ON Semiconductor Corporation
Number three on our list is the Arizona-based, ON Semiconductor Corporation (NASDAQ: ON). ON is special stock in many ways, and is one that is bound to soar high. For one, the stock is extremely resilient, even in the face of severe headwinds. For one, as the wider market slipped into bear territory, ON had continued to thrive. It had risen by an impressive 50% in the last 12 months, whereas the S&P500 had fallen by more than 5%.
The company continues to beat the odds, owing to its robust and financially sustainable business strategy. Unlike its competitors, ON takes a focused and specialized approach to the EV space, as opposed to general offerings. Its chip technology specifically holds automotive applications, which is the core driver of its impressive revenue growth. As a result, ON stands directly exposed to the dynamic growth of EV markets, which highlights its incredible upside potential. As combustion-based engines continue to become outdated, ON will find its semiconductors continuously dominating the mainstream.
Even more impressive is the distance the company has set between itself and all other competitors. Its substantial scale of operations, cost-efficiency, as well as expertise in this specialized domain, positions it to lead this high-growth industry and place it among the best semiconductor stocks. Once the macro headwinds subside, and the bull market resumes, there is no telling as to the rocketing growth this star stock will experience.
ASE Technology Holding
The fourth stock we discuss is the Taiwan-based ASE Technology Holding (NYSE: ASX). ASE Technology is a company that has been increasingly in the market spotlight. Both its top and bottom lines continue to rise at a double-digit pace. ASE did face its fair share of problems in the past, primarily owing to Covid-related operational obstacles, as well as significant macroeconomic headwinds. Despite this, however, management seems optimistic about overcoming short-term complications.
In the first quarter of 2022, year-on-year revenue increased by 21% to $5.2 billion proving it to be one of the best semiconductor stocks. Similarly, earnings per share rose by 63% to $0.21. Growth of such a magnitude, in the wake of record inflation, and an international supply crisis, is truly impressive.
Another attraction up the sleeve of ASX is its dividend yield, which is significantly higher than the industrial average. At present, the company’s annual dividend yield stands at almost 14%. To put this figure into context, the sector median dividend yield presently stands at 1.5%.
ASX presents a golden opportunity to investors who are looking at the best semiconductor stocks. With such promising growth prospects, a stock like this deserves a spot in your portfolio.
Lattice Semiconductor Corporation
The final stock is Lattice Semiconductor Corporation (NASDAQ: LSCC). The stock is a favorite amongst long-term investors, especially given its 3-year rise of an incredible 1350%, which was followed by its plummet in 2022, owing to panic in the financial markets. Despite broader pressures, LSCC fundamentals remain healthy, especially considering the double-digit growth in both its revenue and earnings.
The company occupies a robust position in the market as a low-cost provider of small-form-factor FPGA products. Its focus on low-powered FPGA verticals gives the company the financial advantage of high ROIs. It also makes Lattice Semiconductor a crucial player in the domains of Advanced Driver Assistance Systems, 5G technologies, as well as industrial IoT.
Another edge that LSCC holds over its peers is the design flexibility that is inherent to its FPGA products which is making it count among the best semiconductor stocks. Many customers have reportedly converted competitor FPGAs to that of Lattice. CEO Jim Anderson maintains that this feature is essentially the core driving factor of the company’s soaring revenue growth. To add to its upside potential, Lattice Semiconductor also operates an automotive business segment where its low-power FPGAs are being integrated into EV systems to cater to a wide array of applications. The segment reported 16% sequential revenue growth, and an impressive 40% year-on-year growth.
For a booming stock like LSCC which has seen its price dip, there arises a significant investment opportunity. The stock’s healthy fundamentals, as well as growth prospects, simply make it too good to ignore.
The world of semiconductors promises booming growth, given its critical nature to some of the most important domains around the globe. The industry has rightfully attracted much interest amongst investors, especially considering its role in the future, as the world continues its digital transition. In the recent market-wide bearish tumble, semiconductor stocks too had fallen, despite the strong fundamentals enjoyed by many. These conditions present incredible growth opportunities, especially for those that make the best semiconductor stock picks. Each of the stocks presented in this article offers different core strengths, which would each enhance one’s investment portfolio in a different manner.