In this article, we will discuss the 10 High Growth Semiconductor Stocks That Are Profitable Heading into 2025.
Semiconductors have led industrial advancements and aided key applications such as personal computing, data centers, and cloud computing. As per PwC, Memory ICs were the fastest-growing semiconductor category over the previous 2 decades, with DRAM and HBM standing out. The broader DRAM market is supported by cost and scale, while HBM, because of its advanced technological requirements, reflects a high-barrier, closed-loop ecosystem.
Global Semiconductor Sales Rose 20.7% YoY in November 2024
The Semiconductor Industry Association (SIA) announced that global semiconductor sales touched $57.8 billion during November 2024 month, demonstrating 20.7% growth as compared to November 2023 total of $47.9 billion and 1.6% growth as compared to the October 2024 total of $56.9 billion. As per the report published by SEMI (Semiconductor Equipment and Materials International), the semiconductor industry is expected to begin 18 new fab construction projects in 2025. These new projects will include three 200mm and fifteen 300mm facilities. Notably, the majority will begin operations from 2026 – 2027.
In 2025, the Americas and Japan will be the leading regions with 4 projects each. Next, China and Europe & Middle East regions have 3 planned construction projects. Finally, Taiwan has 2 planned projects, with Korea and Southeast Asia having 1 project each for this year. As per SEMI’s President and CEO, investments have been fueling leading-edge and mainstream technologies to cater to dynamic global demands. Gen-AI and high-performance computing continue to fuel advancements in the leading-edge logic and memory segments. However, mainstream nodes have supported crucial automotive, IoT, and power electronics applications.
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Semiconductor Capacity to Ramp Up
SEMI projects semiconductor capacity to accelerate further, with a 6.6% yearly growth rate to a total of 33.6 million wafers per month (wpm) for 2025. This expansion is expected to primarily stem from leading-edge logic technologies in high-performance computing (HPC) applications and higher penetration of generative AI in edge devices. Overall, the broader semiconductor industry continues to focus on building advanced computing capabilities, and responding to the increased computational demands of LLMs.
Moving forward, foundry suppliers are expected to be the leaders in purchases of semiconductor equipment. The Foundry segment can increase capacity by 10.9% YoY, increasing from 11.3 million wpm in 2024 to 12.6 million wpm in 2025.
Amidst this optimism, let us now have a look at the 10 High Growth Semiconductor Stocks That Are Profitable Heading into 2025
Our Methodology
To list the 10 High Growth Semiconductor Stocks That Are Profitable Heading into 2025, we conducted extensive research and scanned through several online rankings to shortlist companies having ~10% revenue growth over the previous 5 years and TTM net income of at least $400 million. We also mentioned the hedge fund sentiments around each stock, as of Q3 2024. Finally, the stocks were ranked in ascending order of their hedge fund sentiments.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 High Growth Semiconductor Stocks That Are Profitable Heading into 2025
10) Monolithic Power Systems, Inc. (NASDAQ:MPWR)
5-year Sales Growth: ~27.11%
TTM net income: $434.2 Million
Number of Hedge Fund Holders: 38
Monolithic Power Systems, Inc. (NASDAQ:MPWR) is a semiconductor company, specializing in power solutions. The company’s business focuses on designing, developing, and manufacturing integrated circuits utilized for efficient power management in a range of applications. Citi initiated coverage on the company’s shares, providing a “Buy” with a price objective of $700. Monolithic Power Systems, Inc. (NASDAQ:MPWR)’s sales growth is expected to be driven by the anticipated analog inventory replenishment. Furthermore, Citi expects that expanding AI and automotive markets is expected to offset potential losses in the company’s market share.
Elsewhere, Truist Securities’ analyst lauded the company’s strong footing with a variety of AI customers. This diverse customer base can aid Monolithic Power Systems, Inc. (NASDAQ:MPWR)’s growth over the next few years. The company is being recognized for its broad engagement throughout the AI sector, which can translate into long-term growth despite short-term market challenges. The elevated investments in AI hardware throughout industries directly correlate with increased demand for power management solutions. With AI workloads becoming more energy-intensive, Monolithic Power Systems, Inc. (NASDAQ:MPWR)’s emphasis on energy-efficient power solutions can support its growth prospects.
Fred Alger Management, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“Monolithic Power Systems, Inc. (NASDAQ:MPWR) designs high-performance power management solutions, leveraging its expertise in analog design, proprietary process technologies, and system-level applications. Its fabless manufacturing model enables nimble innovation and scalability without requiring the high volumes typical of peers with internal manufacturing. The company serves diverse end markets, including enterprise data, where it has been the sole supplier of power management integrated circuits (ICs) for Nvidia’s AI chips since early 2023, driving significant growth. However, recent reports of potential share loss on Nvidia’s Blackwell platform due to technical issues, which management refutes, have raised some concerns. While management acknowledges the eventual introduction of additional suppliers, we believe these fears are overblown.”
9) Lam Research Corporation (NASDAQ:LRCX)
5-year Sales Growth: ~10.44%
TTM net income: $4,056.8 Million
Number of Hedge Fund Holders: 58
Lam Research Corporation (NASDAQ:LRCX) is engaged in designing, manufacturing, marketing, refurbishing, and servicing semiconductor processing equipment that is used in the fabrication of integrated circuits. The company’s focus on its “4 Horsemen” technologies – Gate-All-Around (GAA), Backside Power, Advanced Packaging, and Dry Resist – reflects a strong opportunity for future growth. Notably, these transformative technologies remain well-placed to address the evolving needs of semiconductor manufacturers as they focus on chip performance and efficiency.
The “4 Horsemen” technologies point to 4 key areas of innovation that the company focuses on to enable advanced semiconductor manufacturing and address difficulties posed by complex chip designs. With the industry transitioning to more advanced node processes, Lam Research Corporation (NASDAQ:LRCX)’s expertise in such critical areas is expected to result in higher market share and increased margins. For example, the adoption of GAA transistors is anticipated to accelerate over the coming years, potentially fueling demand for the company’s specialized equipment. Furthermore, higher demand for semiconductors fueled by dynamic trends such as 5G, AI, autonomous vehicles, and IoT is expected to create a continuous need for Lam Research Corporation (NASDAQ:LRCX)’s equipment.
KeyBanc analyst, Steve Barger, upped Lam Research Corporation (NASDAQ:LRCX)’s shares to “Overweight” from “Sector weight,” giving a price objective of $95. As per the analyst, factors such as a transition to new technologies and the rise of generative AI are expected to support the company. Vltava Fund, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“In the quarter just ended, we added to the portfolio two new companies from the technology sector: Applied Materials and Lam Research Corporation (NASDAQ:LRCX). Both are in the same industry as is another of our investments that we have held for some time, KLA Corporation. This industry is termed semiconductor devices and materials. One chapter in Hidden Investment Treasures is devoted to investing in technology companies and, among other things, the controversy over what really constitutes a technology company. As investors, we try to view technology companies not according to the industry into which they are formally classified but by whether the technologies and technological processes used in the production of their products and services are an essential element in value creation or if they are a source of long-term, sustainable competitive advantage. Among the companies that are formally categorized as technology-based and fall into either the Information Technology or the Communications Services sector, we find some that can be said to be just that but also others for which this classification is at least debatable. Similarly, among companies that do not formally belong to these two sectors, we find many that clearly are built to a large extent on technology and base their market positions and competitiveness on it. In the cases of Applied Materials and Lam Research, there can be no doubt that these are technology companies not only as a formality but also in fact.
Dozens of companies are directly or indirectly involved in the production of semiconductors. Within this broad group of companies, there are several without which it would not be possible to produce advanced types of semiconductors in the world today. These include a group of five very well-known companies, each of which has a dominant global position in its particular field, and which together operate more or less as oligopolies. These are Lam Research, Applied Materials, KLA Corporation, ASML, and Tokyo Electron. At the end of the year, we benefited from a significant correction in the share prices of Applied Materials and Lam Research, and, together with KLA Corporation, we now own three of them. We view these as one collective investment into a critical point within a very important segment of the global economy that is growing and will continue to grow over the long term.
Lam Research manufactures wafer fabrication equipment for the semiconductor industry and also provides related services. The company is a market leader in plasma etching, thin film deposition platforms, photoresist systems, as well as wet and plasma-based cleaning products for individual wafers. Its main customers are the four major semiconductor manufacturers Micron, Samsung, SK Hynix, and Taiwan Semiconductors. Lam Research is a business with net margins of around 27% and ROCE of about 30%. Capital outlays are relatively small. The company has good capital allocation with a preponderance of share buybacks…” (Click here to read the full text)
8) KLA Corporation (NASDAQ:KLAC)
5-year Sales Growth: ~15.97%
TTM net income: $2,966.4 Million
Number of Hedge Fund Holders: 61
KLA Corporation (NASDAQ:KLAC) is engaged in designing, manufacturing, and marketing process control, process-enabling, and yield management solutions for the semiconductor and related electronics industries. Simply put, the company specializes in tools monitoring and improving manufacturing processes for semiconductor wafers, integrated circuits, and other devices. Needham analysts upgraded the company’s shares from “Hold” to “Buy.” This upgrade demonstrates the firm’s confidence in KLA Corporation (NASDAQ:KLAC)’s performance during tough times and its ability to outshine competitors.
As per Needham, semiconductor capital customers can limit capacity expansion because of uncertainty, but not technology upgrades, primarily in advanced nodes. This trend is expected to favour KLA Corporation (NASDAQ:KLAC). Just to let the readers know, the semiconductor capital industry refers to the manufacturing of equipment and machinery used to make semiconductor devices, including microchips and integrated circuits. Furthermore, KLA Corporation (NASDAQ:KLAC) is expected to benefit from an ever-evolving AI trend in the semiconductor industry, which continues to fuel demand for more advanced and complex chip designs.
With chip designs becoming more intricate and complex, the need for sophisticated process control tools, like those offered by KLA Corporation (NASDAQ:KLAC), continues to increase. Cantor Fitzgerald reissued a “Neutral” rating on the company’s shares, setting a $925.00 price target on 8th October. Parnassus Investments, an investment management company, released the Q2 2024 investor letter. Here is what the fund said:
“KLA Corporation (NASDAQ:KLAC), a provider of process control and yield management solutions for the semiconductor and related nanoelectronics industries, continued its strong run. We expect KLA will continue to benefit from the increasing complexity of chip designs.”
