The semiconductor industry, which is hailed as the epicenter of electronics & technology sectors, reached new heights last year due to an augmented expansion of digitalization. However, 2022 has struck specifically hard on all cyclical industries in the wake of the bursting growth bubble, geopolitical tensions, and surging inflation. Semiconductor companies are also a victim of this widespread economic unrest where many leading semiconductor stocks have crashed amid the waning demand.
However, the semiconductor industry incorporates solid fundamentals and all the right drivers that can trigger growth in the coming years. Here we have compiled a “best semiconductor stocks list” if you want to capitalize on this industry’s long-term growth potential.
5 Best semiconductor stocks
1. ON Semiconductor Corp
ON Semiconductor is an Arizona-based semiconductor supplier company providing power solutions at a global level. The firm operates via three segments, offering every-category semiconductor items to facilitate signal conditioning and amplification, power conversion, and voltage regulation, among other functions. Further, the company empowers the electric vehicles industry and fast charging systems while also managing sustainable energy programs for solar, industrial, and storage plants.
Onsemi’s second-quarter revenue report, revealed in August 2022, recorded more than $2 billion in revenue for the first time, with a 25% year-over-year growth rate. Moreover, its GAAP operating margin of 28.0% increased by 1,110 basis points year-over-year. The company was also recently included in the S&P500 Index, manifesting its transformational capacity amid the world’s leading companies.
The corporation has a total market of $31 billion with more than 430 million outstanding shares. Its trailing price-to-earnings and price-to-sales ratios stand at 18.84 and 4.24, respectively.
As per the latest data, ON Semiconductor holds a “buy” rating according to major analyst groups. The stock’s solid fundamentals make it one of the best investment options in the semiconductor stocks list.
2. KLA Corp
Headquartered in California, KLA Corp specializes in developing and processing semiconductor equipment and yield management services for the electronics industry worldwide. The company is divided into four segments, namely Semiconductor Process Control, Specialty Semiconductor Process, PCB, Display and Component Inspection, and Other for better management of operations.
KLA Corp propounds process-enabling solutions for the manufacturing of integrated circuits, circuit boards, flat panel displays, and wafers & reticles. It also deals with specialized semiconductor-based products, including benchtop metrology, plasma & wafer processing technology, electrical property measurement, inspection systems, and various other microelectronics and semiconductor-related services.
The corporation’s latest fiscal 2022 fourth quarter report shows a GAAP-total revenue of $2,487 million and Net Income of $805 million, significantly higher than the previous two quarters. The financial statement reiterated the firm’s sustainable outperformance, highlighting the critical nature of KLA’s products and services in animating the digital transformation of today’s world.
The latest statistics exhibit that KLA has a total market capitalization of approximately $52 billion with a profit margin of 36%. Its trailing P/E and P/S ratios stand at 16.96 and 6.12, respectively. Overall, KLAC stock holds one of the strongest positions in the best semiconductor stocks list for 2022.
3. QUALCOMM Inc
QUALCOMM is a multinational semiconductor company that specializes in delivering semiconductor-based services and wireless technology solutions. The company distributes software and integrated circuits essential for wireless data communications, application processing, networking, and global positioning systems. Further, the company’s QSI segment deals with investing in emerging companies related to multiple sectors, including 5G, automotive, consumer, artificial intelligence, and IoT. It is noteworthy that QUALCOMM has long been a major supplier to Apple Inc, ultimately benefiting from this tech giant’s growth.
QCOM secures a high position among the best semiconductors lists due to its promising prospects and strong quarterly results in a challenging macroeconomic environment. The company’s third-quarter fiscal 2022 results show almost $10.9 billion in revenue with a GAAP EPS of $3.29 and a non-GAAP EPS of $2.96. The EPS Exceeded the High End of Guidance Range, with Greater Than 50% Year-Over-Year Growth. According to the report, the firm has also announced the extension of its patent license agreement with Samsung to deliver leading premium consumer experiences for Samsung Galaxy devices.
Currently, QUALCOMM has a total market capitalization of nearly $159 billion, with more than 1 billion shares outstanding.
4. Analog Devices Inc
Based in Massachusetts, Analog Devices is a semiconductor manufacturing company that focuses on analog, mixed, and digital signal processing technologies. The company offers data converting, power management, driver monitoring, and sequencing solutions. It also manufactures and commercializes radio and microwave ICs, high-end amplifiers, accelerometers, gyroscopes, and other electromechanical systems.
Analog’s Third Quarter Fiscal 2022 manifests a revenue of $3.1 billion with double-digit year-over-year growth across all end markets. Its operating income also came out to be $893, which is 47% more compared to last year. With the report release, Vincent Roche, CEO and Chair of Analog Devices Inc, said, “While economic uncertainty is beginning to impact bookings, demand continues to outpace supply, resulting in higher backlog, paving the way for a strong finish to a banner year.”
ADI occupies a valuable position in the best semiconductor stocks list with a market capitalization of nearly $84 billion.
5. Advanced Micro Devices Inc
Advanced Micro Devices is a popular name in the semiconductor industry that manufactures processors and related technologies for the global market. The company offers a wide range of products, including chipsets, GPUs, microprocessors, System-on-Chip products, and gaming technology solutions. AMD Ryzen processors are the firm’s best line of products suitable for desktops and notebook personal computers. Note that Advanced Micro provides its services to diverse clients, ranging from public cloud service providers and original design manufacturers to independent distributors and online retailers.
The company’s most recent second quarter 2022 report exhibits a record revenue of $6.6 billion, demonstrating a 70% Y/Y growth rate. The growth is driven by all four segments, including data center revenue, client revenue, gaming revenue, and embedded revenue, where data center and embedded products showed the highest sales.
Currently, the company has a total market capitalization of approximately $150 billion with a trailing P/E of 39.36. Overall, AMD incorporates stable fundamentals and high-growth capability, which can remarkably push up its stock’s value in the future.