We recently published a list of 10 Best Performing Semiconductor Stocks So Far in 2025. In this article, we are going to take a look at where Allegro MicroSystems Inc. (NASDAQ:ALGM) stands against other best performing semiconductor stocks so far in 2025.
The performance of the semiconductor industry is commonly measured by the Philadelphia Semiconductor Index (SOX), a capitalization-weighted index comprising 30 of the largest U.S.-traded semiconductor companies. These firms play a critical role in designing, manufacturing, distributing, and selling semiconductors. Year-to-date (YTD), the SOX has delivered a solid return of 5.7%. However, when compared to other S&P 500 sector indices, it ranks seventh in performance, as of February 19. Still, the sector continues to outperform the broader S&P 500 Index, which has posted a 4.5% gain so far in 2025. This moderate growth comes on the heels of an impressive 19% surge in 2024.
The semiconductor industry has shown resilience in 2025, navigating economic uncertainty, rapid technological advancements, and shifting geopolitical dynamics. Demand remains strong across key sectors, including consumer electronics, automotive, and industrial applications. Semiconductor innovation continues to drive transformative technologies, fuelling advancements in artificial intelligence (AI), autonomous vehicles, electric mobility, and next-generation wireless networks. As innovation accelerates, semiconductors will remain at the heart of technological progress, shaping a smarter, greener, and more connected future.
Growth Momentum Expected to Continue
The long-term outlook for the semiconductor industry remains robust, bolstered by policy support and investment in domestic chip manufacturing. According to the Semiconductor Industry Association (SIA)’s 2024 ‘State of the U.S. Semiconductor Industry’ report, U.S. semiconductor manufacturing capacity is projected to more than triple between 2022 and 2032—making it the fastest-growing region in the world during this period. This growth is largely attributed to the CHIPS Act, which has incentivized investment in domestic production. The report further projects that by 2032, the U.S. will hold a 28% share of advanced semiconductor (sub-10nm) manufacturing capacity and capture 28% of global capital expenditures (capex) in the sector. Without the CHIPS Act, the U.S. would have secured only 9% of global capex.
The industry’s upward trajectory is reflected in its financial performance. SIA’s latest report, published on February 7, 2025, revealed that global semiconductor sales reached $627.6 billion in 2024—a 19% increase from the previous year. This momentum is expected to persist, with double-digit growth anticipated for 2025.
Challenges and Potential Risks
Despite strong growth prospects, the semiconductor industry is not without challenges. Geopolitical tensions, supply chain disruptions, and U.S. trade policies, including recently proposed tariffs, could pose risks. However, industry experts believe the direct impact of tariffs on semiconductors may be limited. In a recent CNBC interview, Stacy Rasgon, senior semiconductor analyst at Bernstein Research, noted that while the U.S. imports a substantial volume of semiconductors, only a small fraction originates from countries targeted by tariffs, such as China, Mexico, and Canada. As a result, the direct impact on semiconductor manufacturers is expected to be minimal. However, indirect effects—such as higher costs for consumer electronics and industrial products that incorporate semiconductors—could lead to weaker demand in some markets.
For investors, the semiconductor sector continues to offer compelling opportunities, given its role in driving technological innovation. A strategic and well-researched approach is key to navigating market volatility while capitalizing on long-term growth.
Our Methodology
To identify the 10 best-performing semiconductor stocks year-to-date, we first screened all U.S.-listed semiconductor companies with a market price above $10 to exclude penny stocks. We then filtered these stocks based on their YTD returns and ranked the top 10 in ascending order, placing the best-performing stocks at the top. Additionally, we included data on hedge fund holdings in these companies as of Q4 2024 to provide further insight into investor interest.
Note: All pricing data is as of market close on February 18.
Why are we interested in 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 363.5% since May 2014, beating its benchmark by 208 percentage points (see more details here).
A technician operating a robotic arm on a production line of semiconductor chips.
Allegro MicroSystems Inc. (NASDAQ:ALGM)
YTD Returns: 23%
Number of Hedge Fund Holders: 27
Allegro MicroSystems Inc. (NASDAQ:ALGM) is a designer and manufacturer of power and sensing semiconductor solutions for motion control and energy efficient systems. The company’s products are widely used in automotive, industrial, and consumer applications, providing critical sensing and power solutions.
Allegro MicroSystems Inc. (NASDAQ:ALGM)’s share price has continued its upward trend since the start of the year with YTD returns of around 23%. About 12% of this return came after the company reported its Q3 2025 results (FY ending March) on January 30. Quarterly results were mixed but still considered healthy given the weakness from inventory correction in the industry. The company reported quarterly revenue and EPS which were in line to slightly positive versus expectations. While the semiconductor industry continues to face issues of inventory build-up in its end markets, the company is focusing on reducing inventory and product development in the coming months. Allegro MicroSystems Inc. (NASDAQ:ALGM)’s share price also benefitted from overall improving sentiment in the semiconductor industry.
Allegro MicroSystems Inc. (NASDAQ:ALGM) is well-positioned to capitalize on the EV revolution, with its magnetic sensing and power ICs playing a key role in battery management, ADAS, and electrified powertrains. Allegro is also seeing strong demand from factory automation and renewable energy markets, driving long-term secular growth. Analysts remained broadly positive after the results. Analysts from Evercore ISI and Wells Fargo reiterated their Buy rating on the shares with a price target of $29 and $27, respectively. While maintaining their Buy rating, TD Cowen also raised their price target on Allegro MicroSystems Inc. (NASDAQ:ALGM) to $28 from $25 earlier.
Overall, ALGM ranks 9th on our list of best performing semiconductor stocks so far in 2025. While we acknowledge the potential of ALGM to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ALGM 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 is originally published at Insider Monkey.
