10 Best Semiconductor Penny Stocks To Invest In Right Now

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1. Magnachip Semiconductor Corporation (NYSE:MX)

Number of Hedge Fund Holders In Q3 2024: 21

Magnachip Semiconductor Corporation (NYSE:MX) is a South Korean semiconductor firm that focuses on making and selling chips used in consumer-oriented products such as displays and smartphones. As of H1 2024, 74% of the firm’s revenue came from selling analog devices that are used in power management. These products are used in industrial and consumer applications, and a sluggish Asian economy has meant that Magnachip Semiconductor Corporation (NYSE:MX) has struggled and its shares are down 49%. This weakness has been pronounced particularly due to the firm’s reliance on ex-Korea Asia Pacific revenue which accounted for 57% of its H1 2024 sales and marked an 18% annual drop. Therefore, a recovery in the Asian economy and China should drive the hypothesis and create tailwinds for the shares.

Another key aspect for firms like Magnachip Semiconductor Corporation (NYSE:MX) is their channel inventory. Here’s what management shared on this front during the Q3 2024 earnings call:

“The Industrial segment continued to see a strong rebound in solar. The issues of excess distributor and customer inventory in China now is behind us in this business segment. In addition to solar inverters, demand for solar pumps are expanding the range of applications we address. The Industrial segment also saw growth from additional design wins in the China lighting market with our sixth-generation Super-Junction devices. Finally, the shift to high-speed e-motors for scooters and motorcycles is leading to an increase in Bill-of-Material content and carries the potential for stronger growth. While a relatively smaller contributor to PAS, the Automotive segment continues to show strength. We are building upon our past success in Korea with additional design wins and production ramps for automotive customers in Japan and China.”

MX is a penny semiconductor stock that hedge funds are buying. While we acknowledge the potential of MX as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

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