Semiconductors are the core infrastructure powering the Information Age. Compute-intensive AI workloads are also priming them for the next wave of secular growth, so it’s no wonder the industry has outperformed the market over the past six months, delivering returns of 34.6% while the S&P 500 was flat.
Nevertheless, a cautious approach is imperative because Moore’s Law (a principle stating that computer productivity doubles every two years) will eventually make even the most impactful technologies today obsolete. On that note, here are two resilient semiconductor stocks at the top of our wish list and one best left ignored.
One Semiconductor Stock to Sell:
Amkor (AMKR)
Market Cap: $11.9 billion
Operating through a largely Asian facility footprint, Amkor Technologies (NASDAQ: AMKR) provides outsourced packaging and testing for semiconductors.
Why Does AMKR Fall Short?
- Gross margin of 14.4% is below its competitors, leaving less money to invest in areas like marketing and R&D
- Incremental sales over the last five years were less profitable as its 1.5% annual earnings per share growth lagged its revenue gains
- Lacking free cash flow margin got worse over the last five years as its investment needs accelerated
Amkor is trading at $48.00 per share, or 27.3x forward P/E. Check out our free in-depth research report to learn more about why AMKR doesn’t pass our bar.
Two Semiconductor Stocks to Watch:
AMD (AMD)
Market Cap: $334.7 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 Are We Backing AMD?
- Annual revenue growth of 28.8% over the last five years was superb and indicates its market share increased during this cycle
- Demand for the next 12 months is expected to accelerate above its two-year trend as Wall Street forecasts robust revenue growth of 34.8%
- Earnings growth has comfortably beaten the peer group average over the last five years as its EPS has compounded at 26.4% annually
At $204.80 per share, AMD trades at 30x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Teradyne (TER)
Market Cap: $47.34 billion
Sporting most major chip manufacturers as its customers, Teradyne (NASDAQ: TER) is a US-based supplier of automated test equipment for semiconductors as well as other technologies and devices.
Why Are We Fans of TER?
- Market share is on track to rise over the next 12 months as its 31.5% projected revenue growth implies demand will accelerate from its two-year trend
- Superior product capabilities and pricing power are reflected in its premier gross margin of 58.3%
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures
Teradyne’s stock price of $304.20 implies a valuation ratio of 48.1x 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
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
