The semiconductor industry has always been a battleground for technological development, though lately, it has turned into a full-scale battle. The US and China are not only vying to outpace each other in the race to achieve AI superiority but are also actively trying to slow each other down.
The US for instance has placed a number of export restrictions on global firms selling semiconductor technologies to China. Many leading US companies have had to deal with declining China sales as a result of these restrictions. On the other hand, China is trying its best to come up with technologies that compete with those in the US, despite restrictions.
The emergence of DeepSeek AI at the end of January was a wake-up call for the Americans, with China building its latest AI model for a fraction of the cost that the US counterparts spend on their models. While the validity of these claims is debatable, it does show how far China has come when it comes to competing with the US.
As a result of the DeepSeek AI announcement, many semiconductor stocks took a big hit. Two weeks later, some of the stocks started recovering and investors started feeling comfortable with the thought of continued technological dominance by the US. We therefore decided to look at the semi-stocks that were making a comeback from the DeepSeek dip.
To come up with the list of 15 semiconductor stocks making a comeback from DeepSeek AI dip, we only considered stocks with a market cap of at least $10 billion that beat the S&P 500 in the last 5 days of trading.
15. QUALCOMM Incorporated (NASDAQ:QCOM)
QUALCOMM Incorporated is the developer and marketer of foundational technologies for the telecom industry. The company operates in Qualcomm Technology Licensing (QTL), Qualcomm CDMA Technologies (QCT), and Qualcomm Strategic Initiatives (QSI). The stock is up 1.67% in the last 5 trading days against the S&P 500’s 1.13% gains.
Qualcomm was one of the few companies that responded to the DeepSeek AI developments officially. On the 11th of February, the company released a white paper detailing how it thinks the DeepSeek model could give rise to the demand for on-device AI chips. With cheaper and smaller models coming forth, on-device AI (as opposed to AI on the cloud) is becoming a reality and Qualcomm is set to benefit from it.
Exactly a year ago, Qualcomm released a similar blog post talking about the emergence of on-device AI once the AI data center infrastructure was built. Thanks to DeepSeek, we now realize that making smaller models that are derived from bigger models and designed to excel at specific tasks is where the future is. The commercialization of AI will happen through these mini-modals and the demand for on-device inference will be met by companies like Qualcomm.
14. ON Semiconductor Corporation (NASDAQ:ON)
ON Semiconductor Corporation is an intelligent sensing and power solutions provider that operates in the advanced solutions group, power solutions group, and intelligent sensing group. It provides module, analog, discrete, and integrated semiconductor products as well as single-photon detectors, and other products. The company’s stock is up 1.92% this week.
ON announced its quarterly earnings report on the 10th of February and the market did not like it one bit. The stock tanked after the announcement, mainly because of the first-quarter guidance. The company estimates an EPS of $0.5 in Q1, way below Wall Street’s estimate of $0.9. The revenue guidance at $1.4 billion at the midpoint also didn’t come anywhere close to the analyst forecast of $1.69 billion.
CEO Hassane El-Khoury was confident the company’s long-term strategy won’t be affected by the uncertainties in 2025:
While 2025 remains uncertain, we remain committed to our long-term strategy.
The firm’s long-term plans include the acquisition of Qorvo’s Silicon Carbide Junction Field Effect Transistor (SiC JFET). To put it simply, the tech provides improved transistors that can handle higher voltages and higher temperatures as well as switch faster. This is expected to add $1.3 billion to the company’s TAM while growing at 30% till 2030.
13. Broadcom Inc. (NASDAQ:AVGO)
Broadcom Inc. is a developer, designer, and supplier of different semiconductor devices. The company operates in infrastructure software and semiconductor solutions segments. It offers optical and copper physical layer devices, mobile device connectivity solutions, Ethernet switching and routing custom silicon solutions, RF front-end modules and filters, and other products and services. The stock is up 2.42% in the last week against the S&P 500’s 1.13% gains.
Broadcom’s bullish run has brought it back to almost the same level it was trading at before DeepSeek Monday. The optimism is fueled primarily by the prospects of the company’s custom chips business. AVGO was a beneficiary of hyperscalers looking for custom GPUs to improve the efficiency of their AI model training processes. Since GPUs weren’t as efficient at performing repeated tasks as ASICs (the custom GPUs that Broadcom makes), the ASICs business grew at an exponential rate for AVGO.
Now the company is looking to expand this business further. There are rumors that the company could collaborate with OpenAI to help it make its processors. This could be bigger than it seems, as a potential partnership with OpenAI could open up the company to Project Stargate, essentially giving it access to companies like Oracle, Softbank, and ARM. As an integral component of America’s future AI investments, the company’s business could skyrocket.
12. United Microelectronics Corporation (NYSE:UMC)
United Microelectronics Corporation is an independent semiconductor wafer foundry. The company offers wafer fabrication, circuit design, assembly & testing services, and mask tooling. It provides its products and services to integrated device manufacturers and fabless design companies. The stock is up 2.96% in the last week against the S&P 500’s 1.13% gains. However, it is trading at the same level it was 4 years ago, which is why investors aren’t as keen on the company as other chip stocks.
The recent rally could be because of a 4.17% jump in sales in January. However, there are issues with the company that investors need to know before they jump in based on the current optimism. Last month, the company missed its Q4 estimates and the revenue guidance didn’t excite anyone either. Citi downgraded the stock as a result citing the lack of positive catalysts for the company.
UMC’s guidance for the first quarter includes flat QoQ wafer shipments with a 4-6% decline in gross margins. This suggests the company will report declining QoQ revenues despite an uptick in consumer electronics demand. Similarly, depreciation cost is likely to go up in 2025 and 2026 even though the company expects to reduce its CAPEX by over one-third in 2025. Even though the chart shows a recovering stock price, it may not be a great idea to start taking a position in the stock until more clarity emerges on the company’s growth prospects.
11. Skyworks Solution, Inc. (NASDAQ:SWKS)
Skyworks Solution, Inc. is a developer, designer, manufacturer, and marketer of proprietary semiconductor products. The company offers attenuators, demodulators, digital power isolators, low-noise amplifiers, interface circuits, and other products. The company serves automotive, cellular infrastructure, defense, medical, aerospace, and other markets. The stock is up 0.53% in the last 5 trading days against the S&P 500’s 1.13% gains. Even though the stock underperformed the index, it gained nearly 3% after Tuesday’s big drop, making it a worthy performer for the week.
The company’s shares fell earlier this month after it released the Q1 2025 earning report that indicated a sharper-than-expected decline in the biggest segment sales. SWKS’s top-line figure fell by 11.1%, greater than the anticipated decline of 10.8%. This decline in revenue was not surprising as Wall Street analysts had already predicted it.
Despite the decline in revenue, the company is expanding in Android smartphone and non-smartphone areas which is a good sign. As per CEO Griffin:
Skyworks started the new fiscal year with solid results, growing revenue 4% sequentially and surpassing the midpoint of our guidance. We have observed consistent improvement in demand indicators within Broad Markets, while we have successfully supported multiple new product launches in Mobile.
The company’s ability to bounce back from this will be tested in the coming months as investors digest the poor returns in the last 3 years.
10. Analog Devices, Inc. (NASDAQ:ADI)
Analog Devices, Inc. is a manufacturer, designer, tester, and marketer of software, ICs, and subsystems products. It offers power management and reference products, power ICs, and data converter products. The company serves automotive, aerospace, consumer, and other industries. The stock is up 4.22% in the last 5 trading days against the S&P 500’s 1.13% gains.
ADI’s bullish move during the last week came amid analyst optimism regarding the company’s future prospects. Investment firm Benchmark initiated the stock and made some exciting comments about the stock while assigning a price target of $245, a 14.5% upside from here on. Analysts are impressed by the company’s growth prospects, but investors will also find the margin expansion opportunity as a critical determinant of future returns.
Over the next few years, the company’s new product pipeline will be driven in part by the Maxim acquisition. Earnings are expected to outpace revenue growth by a decent margin going forward. The improvement in the product profile will also help the company close the gap with Texas Instruments, a much bigger rival in the analog semiconductors space.
9. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Advanced Micro Devices, Inc. is a semiconductor company that operates in embedded, client, data center, and gaming segments. It provides AI accelerators, GPUs as standalone devices, data processing units, embedded processors, and other products. The stock is up 4.26% in the last 5 trading days against the S&P 500’s 1.13% gains. However, this hardly matters to investors who are down 37% in a year despite other semiconductor stocks posting enormous gains due to AI spending.
The recent optimism stems from the fact that AMD continues to gain microprocessor market share over rival Intel. The increasing PC and server demand means AMD’s market share grew from 21.6% to 22.1% QoQ. According to Citi’s historical data, Intel’s 67.4% market share is now the lowest since 2002.
Citi also cut AMD’s price target from $170 to $110 after the chipmaker announced its quarterly results. KeyBanc also lowered its price target from $150 to $140. AMD is showing weakness in the data center segment and the company also hasn’t provided guidance for AI revenue, which could stay flat for the first half of 2025. This lack of growth means the market could start giving the share a lower multiple, resulting in lower stock prices as the year progresses. Despite the recent bullish rally, the outlook doesn’t inspire confidence for AMD.
8. NXP Semiconductors N.V. (NASDAQ:NXPI)
NXP Semiconductors N.V. is a semiconductor products provider. The company offers wireless connectivity solutions, application processors, communication processors, microcontrollers, and other products. It sells its products to contract manufacturers, original equipment manufacturers, and distributors. The stock is up 4.64% in the last 5 trading days against the S&P 500’s 1.13% gains.
NXP recently acquired Kirana, a company that makes neural processing units (NPUs) for $307 million. The all-cash deal is expected to close in the first half of this calendar year. According to the company, this acquisition will help the company better integrate its solutions to offer scalable AI platforms serving multiple industries.
Morgan Stanley last week commented on how the cyclical stock could soon take off as tailwinds align to put the cyclicality in the investors’ favor. MS analysts expect the company to improve its margins this year as the industry outlook improves:
With conviction that the [microcontroller unit] cycle is finally bottoming, we see NXPI as the best positioned within our US analog/MCU coverage given the idiosyncratic tailwinds (auto outperformance, GM% expansion).
7. Micron Technology, Inc. (NASDAQ:MU)
Micron Technology, Inc. is a developer, designer, manufacturer, and supplier of storage and memory products. It operates in the Storage Business Unit, Mobile Business Unit, Compute and Networking Business Unit, and Embedded Business Unit. The company sells its products through distributors, direct sales forces, retailers, and independent sales representatives. The stock is up 6.78% in the last week against the S&P 500’s 1.13% gains and is on course to be an outperformer this year, especially in the second half.
Micron stock was hammered after the company gave poor guidance for the fiscal second quarter in December. The stock has been volatile since and has provided a couple of buying opportunities as well. As the Q2 earnings approach, the stock is slowly inching back to its December highs, and for good reason.
In the second half of the fiscal year (March onwards), the company is expected to enjoy strong demand for DRAM. The NAND oversupply is also set to diminish, which should help the company’s topline. These normalizing inventory levels have come just in time as the demand for Micron’s memory products in PCs and smartphones is expected to pick up.
On the flip side, with the demand picking up in low-margin products, the company expects its gross margins to go down sequentially. Due to the NAND oversupply, the manufacturing facility is also not operating at optimal levels, further eating into the margins. As AI spending continues unabated, Micron should keep enjoying strong demand for its DRAM products, helping it survive the downturns of the cyclical industry.
6. Microchip Technology Incorporated (NASDAQ:MCHP)
Microchip Technology Incorporated is a manufacturer, developer, and seller of connected, secure, and smart embedded control solutions. The company provides general-purpose microcontrollers and specialized microcontrollers for computing, power supplies, security, and other applications. The stock is up 6.33% in the last week against the S&P 500’s 1.13% gains.
It is the company’s Q3 2025 earnings that is driving the recent rally. After a disappointing year for shareholders, there is hope that the worst is behind the firm. It reported a 41.9% YoY decline in revenues, mainly due to inventory corrections recorded across all products globally.
The upside in the stock during the last week can be explained with a positive outlook. To start with, Microchip is working on improving efficiency by reorganizing business units and carrying out capacity adjustments at its manufacturing facilities. The company has also decided to close down its Tempe Fab. The inventory, which now stands at 266 days compared to 247 days in the last quarter, is a major area of concern for Microchip. The CEO stated on the earnings call that he is working on halving the inventory days, a move that could free up $250 million cash by FY2026 end.
Microchip’s upcoming products include the 64-bit RISC-V processor with AI powers as well as advanced networking solutions for the automotive industry. The firm’s innovation in the FPGA segment is also gaining strength as it continues to serve industries like AI applications for medical imaging and space exploration.
5. NVIDIA Corporation (NASDAQ:NVDA)
NVIDIA Corporation is a technology company that focuses on designing and manufacturing Graphic Processing Units and computing & networking hardware. The company operates through the graphics and compute & networking segments. The stock is up 6.81% in the last week against the S&P 500’s 1.13% gains.
Nvidia is set to announce its earnings on 26th February, an event that the market is eagerly anticipating. Evercore recently added the company to its Tactical Outperform list in anticipation of the earnings. The firm believes Nvidia is 5-10 years ahead of everyone else in the market, an advantage that will continue to help the company dominate in the future.
The company’s stock had a strong reaction to the DeepSeek AI news but with time, investors have digested the news well and are confident Nvidia’s advancement in the GPU segment is neither likely to be challenged anytime soon nor becoming irrelevant because cheaper AI models are emerging. Nvidia derives its strength not just from its high-quality products but also from its unique ecosystem, which won’t be challenged by the emergence of DeepSeek or similar technologies.
South Korea just announced to buy 10,000 GPUs from Nvidia this year, which goes to show that countries still want the high-end GPUs to fulfill their computation needs. If the earnings next week beat analyst estimates, the market may finally reward investors who’ve been frustrated by the sideways stock movement since the last two quarters.
4. ASE Technology Holding Co., Ltd (NYSE:ASX)
ASE Technology Holding Co. is a semiconductors testing & packaging and electronic manufacturing services provider. The company constructs, manages, develops, sells, and leases real estate properties and offers information software, investment advisory, and other services. The stock is up 7.36% in the last week against the S&P 500’s 1.13% gains.
ASX is riding the strong demand for advanced packaging as a result of AI developments across multiple industries. The company is an OSAT (Outsourced Semiconductor Assembly and Test) service provider so it benefits from semiconductor demand in various industries.
Like TSMC, ASX also has the sword of geopolitical tensions hanging over its head. On top of that, increased competition from Chinese companies is snatching market shares, especially in the mature nodes. Investors can expect the company to maintain its market share in cutting-edge technologies thanks to collaboration with TSMC, but a slip-up would give away that advantage to Chinese rivals who will be happy to take full advantage of it.
3. STMicroelectronics N.V. (NYSE:STM)
STMicroelectronics N.V. is a developer, manufacturer, designer, and supplier of semiconductor products. It operates in analog, MEMS, and sensors groups; microcontrollers and digital ICs groups, and automotive and discrete group segments. The company distributes its products through retailers, distributors, and sales representatives. The stock is up 9.04% in the last week against the S&P 500’s 1.13% gains.
STM is likely to witness improving gross margins and inventories in the second half of the year, mainly due to the launch of newer smartphone models. The company is also trimming its workforce, which will not only help improve margins by the end of 2026 but will also drive a reduction of $300 million to $360 million in operating expenses by the second half of 2027.
There are multiple headwinds before all that good news materializes though. To begin with, the analysts are not very optimistic about the company’s short-term prospects. Q1 guidance was below expectations and the reason was inventory correction in ADAS (Advanced Driving Assitance Systems) at a major customer. Lower capacity reservation fees are also impacting the company’s revenues. The company is also facing competition in China in the MCU market, which may well force the company to use a Chinese foundry to stay competitive.
2. GlobalFoundries Inc. (NASDAQ:GFS)
GlobalFoundries Inc. operates as a semiconductor foundry that offers a variety of mainstream wafer fabrication services & technologies. The company develops different devices such as mobile application processors, network processors, microcontrollers, baseband processors, and other devices. The stock is up 11.27% in the last week against the S&P 500’s 1.13% gains.
The stock is gaining on analyst optimism as Needham upgraded the stock from Hold to Buy last week, assigning a price target of $50, a 16% upside from here on. Needham analysts believe the cyclical downturn is about to end for the semiconductor industry and a return to YoY growth is on the horizon:
Not only do we forecast a return to Y/Y growth in 2025 but also we see meaningful gross margin expansion through the year. We also believe GFS may benefit from increasing geopolitical tensions between the U.S. and China as customers onshore semiconductor manufacturing.
The bullish thesis backed by geopolitical tensions is likely to drive the stock prices higher as America focuses on Project Stargate and other ventures to keep China at bay in AI. It is also well-supported by the strong data center and automotive markets in 2025.
1. Intel Corporation (NASDAQ:INTC)
Intel Corporation is a developer, manufacturer, designer, marketer, and supplier of computing and related services and products. It provides various products including Computer Systems and Devices, memory and storage, and microprocessors and chipsets. The stock is up 22.53% in the last week against the S&P 500’s 1.13% gains.
Intel stock has lost half its value in the last year alone, but it is now at a level where talks of bailing out the company as a matter of national security are causing an upsurge in price. Just yesterday, the Wall Street Journal reported that both Broadcom and Taiwan Semiconductor Manufacturing are interested in buying parts of Intel’s business, with Broadcom focused on the chip design and marketing part of the business.
TSM is unlikely to be given a major stake in Intel as it is a foreign entity. However, the talks of such a buyout or investment are likely to unlock a better valuation for investors, which is what’s at play here right now.
On the business front, the company’s sales went down 7% YoY in Q4 while the Network and Edge segment grew 10%. While there is potential for growth, investors are likely not betting on that right now. With former CEO Gelsigner ousted from the company and his turnaround plan in the doldrums, investors would like to see more evidence of an improving business before they put their money in the stock.
Intel is not on our latest list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 68 hedge fund portfolios held INTC at the end of the third quarter which was 75 in the previous quarter. While we acknowledge the potential of INTC as a leading AI investment, our conviction lies in the belief that some 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 as promising as INTC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
