Wall Street has gotten increasingly bearish on semiconductor stocks over the past few months as concerns about the profitability and sustainability of AI have gained traction. This was compounded by DeepSeek at first. The market recovered from that, but as Microsoft started canceling some data center leases and Nvidia failed to beat earnings by stellar margins, sentiment has turned sour again.
AI-related semiconductor stocks, which have been pick-and-shovel plays, are bearing the brunt of the selloffs, as they are the ones sitting on top of a two-year-long rally. This is a cyclical industry, so it’s possible that semiconductor stocks are now shifting into a bearish phase.
You should keep up with these stocks, as they’ve delivered multibagger gains over the past two years. There’s a good chance that the AI narrative recovers from here. And even if it doesn’t, it’s still worth looking into the big losers and the reasons behind their decline.
A technician looking at a circuit board of analog semiconductor products.
Methodology
For this article, I screened the worst-performing semiconductor stocks year-to-date.
I will also mention the number of hedge fund investors in these stocks. 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
15. ON Semiconductor Corp (NASDAQ:ON)
Number of Hedge Fund Holders In Q4 2024: 52
ON Semiconductor Corp (NASDAQ:ON) makes power and sensing semiconductor products.
The stock is down significantly so far in 2025 as it reported Q4 2024 revenue of $1.72 billion, which missed analyst estimates of $1.76 billion. Adjusted EPS also came in at $0.95 and below the expected $0.97. All of its major segments reported revenue declines.
Power Solutions Group’s revenue was down 16% to $809.4 million, Analog and Mixed-Signal Group was down 18% to $610.6 million, and Intelligent Sensing Group’s revenue was down about 2% to $302.5 million.
On top of that, the company provided weak guidance for Q1 2025. Revenue is expected to be in the range of $1.35 billion to $1.45 billion, well below analyst estimates of $1.69 billion. Gross margin guidance was also reduced to 38.9%-40.9%. Previously, this was at above 45%.
Also, ON Semiconductor announced a restructuring plan that included cutting 9% of its workforce to reduce costs amid declining demand and falling revenue. The layoffs are expected to cost $50 million to $60 million in charges this year.
The consensus price target of $67.12 implies 49.45% upside.
ON stock is down 29.02% year-to-date.
14. MaxLinear Inc (NASDAQ:MXL)
Number of Hedge Fund Holders In Q4 2024: 26
MaxLinear Inc (NASDAQ:MXL) makes radio frequency, analog, mixed-signal, and digital integrated circuits for high-speed communication systems.
The stock is down significantly so far in 2025 as MaxLinear reported Q4 2024 revenue of $92.17 million, down 26% year-over-year. GAAP EPS loss came in at $0.68 and missed analyst expectations by $0.26. Operating expenses as a percentage of revenue increased significantly compared to the prior year.
It also gave weak Q1 2025 guidance and projects revenue between $85 million and $105 million. This guidance disappointed investors who had hoped for stronger recovery signals following bullish management commentary at industry conferences.
The consensus price target of $25.5 implies 86.13% upside.
MXL stock is down 29.32% year-to-date.
13. Cohu Inc (NASDAQ:COHU)
Number of Hedge Fund Holders In Q4 2024: 13
Cohu Inc (NASDAQ:COHU) makes semiconductor test and inspection equipment.
The stock is down significantly so far in 2025, as it reported $94.1 million in Q4 2024 revenue. This is a sharp decline from $137.2 million in Q4 2023 and missed consensus estimates of $95.1 million.
It also posted a GAAP net loss of $0.46 per share vs. a loss of $0.04 per share a year ago. Non-GAAP EPS missed the expected loss of $0.012 and came in at $0.15.
For Q1 2025, Cohu guided revenue to $97 million (±$7 million). Again, this is below analyst expectations of $103.59 million. Management cited delayed customer orders and continued market weakness as key factors behind the soft outlook.
The consensus price target of $30.57 implies 72.04% upside
COHU stock is down 31.78% year-to-date.
12. Sunrun Inc (NASDAQ:RUN)
Number of Hedge Fund Holders In Q4 2024: 38
Sunrun Inc (NASDAQ:RUN) is a residential solar energy company.
The stock is down significantly so far in 2025 after it missed Q4 2024 earnings. It reported Q4 revenue of $518.5 million and missed analyst expectations of $538.3 million.
It managed to beat profit expectations with $1.41 in EPS, but the revenue shortfall caused market sentiment to turn deeply negative. Analysts lowered their price targets, and the stock dropped even further.
The company also has high levels of debt. The Fed is holding “higher for longer” due to inflation moderating slowly and tariff threats, which isn’t conducive to a good stock market performance.
The consensus price target of $17.61 implies 185.48% upside.
RUN stock is down 31.81% year-to-date.
11. Indie Semiconductor Inc (NASDAQ:INDI)
Number of Hedge Fund Holders In Q4 2024: 22
Indie Semiconductor Inc (NASDAQ:INDI) makes automotive semiconductors and software for advanced driver assistance systems.
The stock is down significantly so far in 2025 since it missed Q4 2024 EPS estimates. Non-GAAP EPS was a loss of $0.07 and missed analysts’ expectations by $0.08.
It reported Q4 2024 revenue of $58 million, a 17% year-over-year decline but a 7.5% sequential increase. It also provided weak guidance and projects revenue between $52.5 million and $57.5 million (midpoint $55 million), below analyst expectations of $61.3 million.
Several analysts have cut their price targets since.
The consensus price target of $7.5 implies 170.76% upside.
INDI stock is down 33.54% year-to-date.
10. Ultra Clean Holdings Inc (NASDAQ:UCTT)
Number of Hedge Fund Holders In Q4 2024: 22
Ultra Clean Holdings Inc (NASDAQ:UCTT) makes subsystems, parts, and ultra-high purity cleaning and analytical products for the semiconductor industry.
The stock is down significantly so far in 2025 as it issued weak Q1 guidance during its Q4 2024 earnings. It projected revenue between $505 million and $555 million, below the analyst consensus of $561.4 million.
It also forecasts EPS of $0.22 to $0.42. This falls short of the $0.54 estimate and caused a drop in the stock.
The company blames a slowdown in its business in China. Moreover, Levi & Korsinsky announced an investigation into potential violations of federal securities laws by Ultra Clean Holdings.
The consensus price target of $56.75 implies 143.14% upside.
UCTT stock is down 34.41% year-to-date.
9. Navitas Semiconductor Corp (NASDAQ:NVTS)
Number of Hedge Fund Holders In Q4 2024: 13
Navitas Semiconductor Corp (NASDAQ:NVTS) makes gallium nitride (GaN) and silicon carbide (SiC) power semiconductors.
The stock is down significantly so far in 2025, as it posted disappointing Q4 2024 results and weak guidance for Q1 2025. Navitas reported Q4 revenue of $18 million, down 31% year-over-year and a loss of $0.21 per share. Both metrics missed analyst estimates.
Analysts expected $19.03 million in revenue and a $0.14 loss per share. For Q1 2025, the company guided revenue between $13 million and $15 million, implying a year-over-year decline of ~39.6% at the midpoint.
Moreover, Nvidia’s Q4 report had negative spillover effects on the stock.
The consensus price target of $4.25 implies 85.59% upside.
NVTS stock is down 34.45% year-to-date.
8. SkyWater Technology Inc (NASDAQ:SKYT)
Number of Hedge Fund Holders In Q4 2024: 19
SkyWater Technology Inc (NASDAQ:SKYT) is a pure-play tech foundry in the semiconductor manufacturing sector.
The stock is down significantly so far in 2025, as it projected Q1 2025 revenue between $59 million and $63 million. This is a very weak guidance and would lead to a sequential decline of 21% from Q4 2024.
Moreover, while Advanced Technology Services (ATS) revenue grew by 13%, Wafer Services revenue declined by 56% to $26.9 million. This shift toward higher-margin ATS services has yet to offset the overall revenue decline in traditional wafer services, so investors are concerned that the company can’t deliver solid earnings.
The consensus price target of $12 implies 43.88% upside.
SKYT stock is down 36.66% year-to-date.
7. Impinj Inc (NASDAQ:PI)
Number of Hedge Fund Holders In Q4 2024: 37
Impinj Inc (NASDAQ:PI) specializes in RAIN RFID technology and offers endpoint ICs, reader ICs, and software solutions for item-level tracking.
The stock is down significantly so far in 2025 as Impinj issued disappointing guidance for the first quarter of 2025. The company projected revenue between $70 million and $73 million. This is well below analyst estimates of $93.3 million and implies a potential decline of 5-9% year-over-year.
Furthermore, EPS guidance ranged from $0.06 to $0.11 and is far below the $0.42 consensus.
Management flagged excess inventory among channel inlay partners as a key issue impacting endpoint IC sales. This inventory buildup is expected to take time to clear.
The consensus price target of $180.1 implies 105.29% upside.
PI stock is down 37.88% year-to-date.
6. Semtech Corp (NASDAQ:SMTC)
Number of Hedge Fund Holders In Q4 2024: 57
Semtech Corp (NASDAQ:SMTC) sells IoT systems and high-performance semiconductors. It is also a cloud connectivity service provider.
The stock is down significantly so far in 2025 due to Semtech announcing that FY2026 sales for its CopperEdge products would fall below the previously projected $50 million floor.
This was attributed to changes in server rack architecture by a major customer (believed to be Nvidia), which reduced demand for CopperEdge products due to heating issues.
Following the CopperEdge guidance cut, multiple law firms launched securities fraud investigations into Semtech. These investigations allege that the company misrepresented the viability and market potential of its CopperEdge products. In turn, analysts ended up downgrading the stock.
The consensus price target of $67.91 implies 90.86% upside.
SMTC stock is down 40.91% year-to-date.
5. Aehr Test Systems (NASDAQ:AEHR)
Number of Hedge Fund Holders In Q4 2024: 15
Aehr Test Systems (NASDAQ:AEHR) provides semiconductor test and burn-in solutions. The company specializes in wafer-level and package-level systems.
The stock is down significantly so far in 2025, as it posted disappointing Q2 FY2025 results. Aehr Test Systems reported Q2 fiscal 2025 revenue of $13.5 million, down 37% year-over-year from $21.4 million.
It also posted a GAAP net loss of $1 million compared to a $6.1 million profit in the year earlier. EPS came in at $0.02 and missed the $0.03 consensus estimate.
The consensus price target of $25 implies 182.49% upside.
AEHR stock is down 44.86% year-to-date.
4. Shoals Technologies Group Inc (NASDAQ:SHLS)
Number of Hedge Fund Holders In Q4 2024: 31
Shoals Technologies Group Inc (NASDAQ:SHLS) provides electrical balance of system (EBOS) solutions and components.
The stock is down significantly so far in 2025, as Shoals projected first-quarter revenue of $70 million to $80 million. This came in significantly below the $109 million consensus.
Furthermore, Shoals reported Q4 2024 EPS of $0.08 and missed analyst expectations of $0.09. Revenue for the quarter was $107 million, down 18% from the prior-year quarter. Gross profit margins also fell to 37.6% from 42.5%.
Plus, the U.S. International Trade Commission reversed an earlier ruling in Shoals’ favor regarding a patent infringement case against Voltage LLC.
The consensus price target of $8.95 implies 209.69% upside.
SHLS stock is down 46.56% year-to-date.
3. Astera Labs Inc (NASDAQ:ALAB)
Number of Hedge Fund Holders In Q4 2024: 51
Astera Labs Inc (NASDAQ:ALAB) makes semiconductor-based connectivity products.
The stock is down significantly so far in 2025 as CFO Michael Tate sold 125,800 shares at an average price of $82.53. It totaled $10.38 million and spooked investors.
This is on top of an earlier Morgan Stanley report that downgraded Astera Labs from Overweight to Equal Weight. Analysts flagged Astera Labs as being overvalued relative to its fundamentals after significant gains in late 2024 and early 2025. Heavy selling pressure has persisted since then.
The consensus price target of $115.33 implies 70.41% upside.
ALAB stock is down 48.95% year-to-date.
2. Atomera Inc (NASDAQ:ATOM)
Number of Hedge Fund Holders In Q4 2024: 7
Atomera Inc (NASDAQ:ATOM) makes and licenses semiconductor materials and technologies.
The stock is down significantly so far in 2025 after a massive Q4 2024 revenue miss. Atomera reported Q4 2024 revenue of $20,000, which is significantly below the $500,000 forecast.
EPS matched expectations at -$0.16, but the revenue miss overshadowed any optimism regarding earnings.
Atomera reported total revenue of $135,000 for all of 2024 and also posted a net loss of $18.4 million compared to $19.8 million in 2023. It has $27 million in cash and $2 million in debt.
The consensus price target of $7 implies 31.58% upside.
ATOM stock is down 53.97% year-to-date.
1. SEALSQ Corp (NASDAQ:LAES)
Number of Hedge Fund Holders In Q4 2024: 4
SEALSQ Corp (NASDAQ:LAES) makes semiconductors and post-quantum cryptography technologies.
The stock is down significantly so far in 2025 due to SEALSQ reporting weak financial results in the past few quarters. The company has seen declining revenues and widening losses.
The company also posted a net loss of $13 million and a profit margin of -65.31% TTM. Plus, there was a temporary trading halt in January that triggered an earlier decline.
Analysts currently think the stock is overvalued, and this is being compounded by the bearish sentiment in the broader semiconductor industry.
The consensus price target of $1.75 implies 22.91% downside.
LAES stock is down 60.49% year-to-date.
While we acknowledge the potential of LAES as an investment, our conviction lies in the belief that some 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 LAES but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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