We recently published a list of 10 Undervalued Semiconductor Stocks to Buy According to Analysts. In this article, we are going to take a look at where NXP Semiconductors N.V. (NASDAQ:NXPI) stands against other undervalued semiconductor stocks to buy according to analysts.
Global market intelligence firm IDC, in its most recent report, projected a 15% growth for the global semiconductor market in 2025, driven by the relentless rise in demand for artificial intelligence (AI) and high-performance computing (HPC). According to their analysts, this surge will be fueled by forthcoming upgrades in key application markets, notably cloud data centers. Further emphasizing the industry’s promising growth outlook, Nicolas Gaudois, head of Asia-Pacific technology research at UBS, stated in a recent CNBC interview that AI-compute will continue to underpin growth in 2025. He observed:
“The 21% growth in the semiconductor market was mostly driven by AI-compute demand while non-AI growth actually declined. In 2025, AI would remain the growth driver with 40% growth but we expect non-AI portion to also grow by 17% due to several factors such as autos and industrial markets growth improving, restocking (customers buying for their inventories) in those markets and also increase in semiconductor content in devices to support edge (on-device) AI.”
Nicolas also suggested that GPU chipmakers and foundries will remain the main beneficiaries of AI demand and will make the most money from it. With the semiconductor space ripe for further growth, we have picked 10 semiconductor stocks that are undervalued and are best placed to benefit from this growth.
Our Methodology
To identify the 10 undervalued semiconductor stocks, we carried out thorough research and used stock screeners to compile a list of U.S.-listed companies. Our criteria included a market capitalization of over $2 billion, an expected share price upside of at least 10%, and a Forward PE ratio below 30x. Ultimately, the stocks were ranked in ascending order of their upside potential. These stocks are also popular among elite hedge funds.
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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A close-up of a semiconductor component, highlighting its complex design.
NXP Semiconductors N.V. (NASDAQ:NXPI)
Upside Potential: 20%
Fwd. PE: 16.6
NXP Semiconductors N.V. (NASDAQ:NXPI) specializes in designing and manufacturing microcontrollers, processors, sensors, analog chips, and connectivity modules for various applications, including automotive, industrial, mobile, and IoT solutions. The company has always focused on elevating its existing businesses, and 2025 has already witnessed two significant developments. Firstly, on January 5, 2025, it announced the acquisition of Austria-based TTTech Auto in an all-cash deal valued at $625 million. While this acquisition might be relatively smaller in scale, TTTech brings unique safety-critical systems and middleware for software-defined vehicles (SDVs) that will complement NXP’s CoreRide platform. The management at NXP Semiconductors N.V. (NASDAQ:NXPI) is quite optimistic about this acquisition:
“The inclusion of TTTech Auto’s software into the NXP CoreRide solution further strengthens NXP’s automotive value proposition and accelerates the automotive industry’s transformation to software-defined vehicles. NXP CoreRide enables automakers to deploy their best-in-class, differentiated vehicle platforms more efficiently, faster, and safely. Our acquisition of TTTech Auto is the next big step in NXP’s journey to become the leading provider of intelligent edge systems in automotive and Industrial IoT.”
Secondly, NXP Semiconductors (NASDAQ:NXPI) also secured a €1 billion loan from European Investment Bank (EIB) to advance its research, development, and innovation efforts across its broad portfolio of semiconductor solutions. Its positive investment thesis also received a boost from Goldman Sachs as the firm upgraded its rating to Buy from Neutral with a price objective of $257.
Overall, NXPI ranks 6th on our list of undervalued semiconductor stocks to buy according to analysts. While we acknowledge the potential of NXPI 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 NXPI 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.
