Semiconductors are the silicon backbone of the digital revolution. But they’re also susceptible to economic fluctuations as chip demand will ebb and flow with capital spending. Unfortunately, the market seems to be predicting a downturn as the industry has tumbled by 4.2% over the past six months. This drop was discouraging since the S&P 500 stood firm.
The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. Taking that into account, here are two semiconductor stocks boasting durable advantages and one we’re steering clear of.
One SemiconductorStock to Sell:
NXP Semiconductors (NXPI)
Market Cap: $54.95 billion
Spun off from Dutch electronics giant Philips in 2006, NXP Semiconductors (NASDAQ: NXPI) is a designer and manufacturer of chips used in autos, industrial manufacturing, mobile devices, and communications infrastructure.
Why Is NXPI Not Exciting?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 3.3% annually over the last two years
- Forecasted revenue decline of 1.6% for the upcoming 12 months implies demand will fall even further
- 10.1 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
NXP Semiconductors’s stock price of $215 implies a valuation ratio of 17.8x forward P/E. Dive into our free research report to see why there are better opportunities than NXPI.
Two Semiconductor Stocks to Watch:
AMD (AMD)
Market Cap: $204.9 billion
Founded in 1969 by a group of former Fairchild semiconductor executives led by Jerry Sanders, Advanced Micro Devices (NASDAQ: AMD) is one of the leading designers of computer processors and graphics chips used in PCs and data centers.
Why Does AMD Stand Out?
- Annual revenue growth of 30.8% over the last five years was superb and indicates its market share increased during this cycle
- Demand will likely accelerate over the next 12 months as its forecasted revenue growth of 16.7% is above its two-year trend
- Earnings per share have massively outperformed its peers over the last five years, increasing by 36.9% annually
AMD is trading at $125.06 per share, or 27.6x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Qualcomm (QCOM)
Market Cap: $172.9 billion
Having been at the forefront of developing the standards for cellular connectivity for over four decades, Qualcomm (NASDAQ: QCOM) is a leading innovator and a fabless manufacturer of wireless technology chips used in smartphones, autos and internet of things appliances.
Why Are We Fans of QCOM?
- Annual revenue growth of 11.3% over the last five years beat the sector average and underscores the unique value of its offerings
- Strong free cash flow margin of 30.4% enables it to reinvest or return capital consistently
- Industry-leading 52.2% return on capital demonstrates management’s skill in finding high-return investments
At $155.62 per share, Qualcomm trades at 13.3x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
