2 Semiconductor Stocks with Exciting Potential and 1 We Turn Down

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Semiconductors are the picks and shovels of modern technology. The way we live and work is also changing with AI, which is creating secular demand for more powerful chips. As a result, the industry has seen solid stock price performance over the last six months as its gain of 14.1% has outpaced the S&P 500’s 8.6% return.

Regardless of these results, investors must exercise caution as the rapid pace of innovation can easily turn today’s winners into tomorrow’s losers. On that note, here are two semiconductor stocks boasting durable advantages and one we’re swiping left on.

One Semiconductor Stock to Sell:

onsemi (ON)

Market Cap: $21.21 billion

Spun out of Motorola in 1999 and built through a series of acquisitions, onsemi (NASDAQ: ON) is a global provider of analog chips specializing in autos, industrial applications, and power management in cloud data centers.

Why Is ON Not Exciting?

  1. Sales tumbled by 12.5% annually over the last two years, showing market trends are working against its favor during this cycle
  2. Forecasted revenue decline of 4.5% for the upcoming 12 months implies demand will fall even further
  3. Day-to-day expenses have swelled relative to revenue over the last five years as its operating margin fell by 4.3 percentage points

onsemi is trading at $51.99 per share, or 19.9x forward P/E. Read our free research report to see why you should think twice about including ON in your portfolio.

Two Semiconductor Stocks to Watch:

AMD (AMD)

Market Cap: $272.2 billion

Founded in 1969 by a group of former Fairchild semiconductor executives led by Jerry Sanders, Advanced Micro Devices (NASDAQ: AMD) is one of the leading designers of computer processors and graphics chips used in PCs and data centers.

Why Are We Positive On AMD?

  1. Annual revenue growth of 16.3% over the last two years was superb and indicates its market share increased during this cycle
  2. Demand for the next 12 months is expected to accelerate above its two-year trend as Wall Street forecasts robust revenue growth of 22.7%
  3. Earnings growth has comfortably beaten the peer group average over the last five years as its EPS has compounded at 32% annually

At $168.36 per share, AMD trades at 33.4x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.

Universal Display (OLED)

Market Cap: $6.89 billion

Serving major consumer electronics manufacturers, Universal Display (NASDAQ: OLED) is a provider of organic light emitting diode (OLED) technologies used in display and lighting applications.

Why Could OLED Be a Winner?

  1. Offerings and unique value proposition resonate with customers, as seen in its above-market 12.4% annual sales growth over the last five years
  2. Superior product capabilities and pricing power are reflected in its best-in-class gross margin of 75.4%
  3. Disciplined cost controls and effective management resulted in a strong two-year operating margin of 38.1%

Universal Display’s stock price of $147.77 implies a valuation ratio of 31x forward EV-to-EBITDA. Is now the time to initiate a position? See for yourself in our full research report, it’s free.

Stocks We Like Even More

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today

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