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AI and Earnings Set Semiconductor Stocks on Record Rally: 5 Top Picks
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Key Takeaways
NVDA hits records as AI demand drives growth and boosts semiconductor rally momentum.
MCHP, TXN gain from strong analog and microcontroller demand and rising earnings outlook.
RFIL and ADI see growth potential as AI, memory demand and chip sales projections climb.
The semiconductor industry has been on a rally this year after a solid 2025. Higher demand for semiconductors across industries has been driving sales, with the Philadelphia Semiconductor Index surging to a record high last week.
The continued enthusiasm surrounding artificial intelligence (AI) has seen mega-cap tech companies spending aggressively on infrastructure. Also, stellar earnings from a spate of semiconductor giants have been benefiting the broader industry.
Given the upbeat sentiment, it would be ideal to invest in semiconductor stocks, such as NVIDIA Corporation (NVDA - Free Report) , Microchip Technology (MCHP - Free Report) , Texas Instruments (TXN - Free Report) , RF Industries, Ltd. (RFIL - Free Report) and Analog Devices (ADI - Free Report) , which have great potential for growth this year.
Semiconductor Stocks on a Rally
The Philadelphia Semiconductor Index shed 1% on Monday, snapping its 18-day winning streak, the longest in its 32-year history. The semiconductor industry has been on a roll this year, with stocks hitting record highs on robust demand.
Last week’s rally got a boost after Intel (INTC - Free Report) reported impressive earnings, helping the stock record its best single-day performance since 1987. Earlier this month, NVIDIA hit its own record high of $216.82, and on Friday, the semiconductor giant reclaimed its $5-trillion market capitalization.
Following this, the Philadelphia Semiconductor Index jumped 3.2% to a record high. The index has surged 47.2% year to date and is on track for a bull run this year.
Industry Poised to Grow
As mega-cap tech companies continue their spending spree on AI infrastructure, investors are growing confident. The semiconductor sub-industry is projected to deliver first-quarter earnings growth of 109.2%, significantly outpacing the broader S&P 500 information technology sector, which is expected to grow by 48.2%, according to LSEG data, as reported by Reuters.
The ongoing AI infrastructure boom is expected to help the broader semiconductor industry this year, with annual sales projected to reach $975 billion globally, according to a Deloitte report.
The report also predicts that generative AI chips will hit revenues of $500 billion in 2026, or roughly half of global chip sales.
As artificial intelligence moves beyond high-end data centers and into everyday devices, the need for specialized AI chips is growing fast. At the same time, demand for memory components like NAND flash and DRAM is picking up again, fueled by more powerful computing needs and AI-driven workloads. Against this backdrop, semiconductor stocks look well-placed to benefit from near-term growth opportunities.
5 Semiconductor Stocks With Growth Potential
NVIDIA Corporation
NVIDIA Corporation is the worldwide leader in visual computing technologies and the inventor of the graphics processing unit, or GPU. Over the years, NVDA’s focus has evolved from PC graphics to AI-based solutions that now support high-performance computing, gaming and virtual reality platforms.
NVIDIA has an expected earnings growth rate of 69% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 8.5% over the last 60 days. NVDA currently has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Microchip Technology
Microchip Technology has been consistently benefiting from its strength in the analog and microcontroller businesses. MCHP’s dominance in 8, 16, and 32-bit PIC microcontrollers remains a major driver of top-line and bookings growth. Microchip Technology has acquired notable companies like Tekron International, Microsemi and Atmel to add strength to its product offerings.
Microchip Technology’s expected earnings growth rate for the current year is 20.6%. The Zacks Consensus Estimate for current-year earnings has improved 1.3% over the past 60 days. MCHP currently has a Zacks Rank #2 (Buy).
Texas Instruments
Texas Instruments is an original equipment manufacturer of analog, mixed-signal and digital signal-processing integrated circuits. TXN has manufacturing and design facilities, including wafer fabrication and assembly/test operations in North America, Asia and Europe. Management strategy has been to build assets that would be fully utilized through their lifetimes and outsource any excess demand in peak situations to outside foundries.
Texas Instruments’ expected earnings growth rate for the current year is 33.8%. The Zacks Consensus Estimate for current-year earnings has improved 14.6% over the past 60 days. TXN carries a Zacks Rank #1.
RF Industries, Ltd.
RF Industries, Ltd. is engaged in the design, manufacture and distribution of coaxial connectors used in radio communications applications as well as in computers, test instruments, PC LANS and antenna devices.
RF Industries’ expected earnings growth rate for the current year is 45%. The Zacks Consensus Estimate for current-year earnings has improved 34.9% over the past 60 days. RFIL presently has a Zacks Rank #2.
Analog Devices
Analog Devices is an original equipment manufacturer of semiconductor devices, specifically analog, mixed-signal and digital signal processing (“DSP”) integrated circuits. ADI’s product line comprises amplifiers and comparators; analog to digital converters; digital to analog converters; video encoders and decoders; embedded processing products and DSPs; MEMS and temperature sensors; RF/IF components and converters; power and thermal management ICs, audio/video converters, amplifiers, CODECs, filters and processors. Analog Devices also offers analog, digital and RF switches and multiplexers; analog microcontrollers; clock and timing products.
Analog Devices’ expected earnings growth rate for the current year is 46.1%. The Zacks Consensus Estimate for current-year earnings has improved 1.4% over the past 60 days. ADI currently carries a Zacks Rank #2.
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AI and Earnings Set Semiconductor Stocks on Record Rally: 5 Top Picks
Key Takeaways
The semiconductor industry has been on a rally this year after a solid 2025. Higher demand for semiconductors across industries has been driving sales, with the Philadelphia Semiconductor Index surging to a record high last week.
The continued enthusiasm surrounding artificial intelligence (AI) has seen mega-cap tech companies spending aggressively on infrastructure. Also, stellar earnings from a spate of semiconductor giants have been benefiting the broader industry.
Given the upbeat sentiment, it would be ideal to invest in semiconductor stocks, such as NVIDIA Corporation (NVDA - Free Report) , Microchip Technology (MCHP - Free Report) , Texas Instruments (TXN - Free Report) , RF Industries, Ltd. (RFIL - Free Report) and Analog Devices (ADI - Free Report) , which have great potential for growth this year.
Semiconductor Stocks on a Rally
The Philadelphia Semiconductor Index shed 1% on Monday, snapping its 18-day winning streak, the longest in its 32-year history. The semiconductor industry has been on a roll this year, with stocks hitting record highs on robust demand.
Last week’s rally got a boost after Intel (INTC - Free Report) reported impressive earnings, helping the stock record its best single-day performance since 1987. Earlier this month, NVIDIA hit its own record high of $216.82, and on Friday, the semiconductor giant reclaimed its $5-trillion market capitalization.
Following this, the Philadelphia Semiconductor Index jumped 3.2% to a record high. The index has surged 47.2% year to date and is on track for a bull run this year.
Industry Poised to Grow
As mega-cap tech companies continue their spending spree on AI infrastructure, investors are growing confident. The semiconductor sub-industry is projected to deliver first-quarter earnings growth of 109.2%, significantly outpacing the broader S&P 500 information technology sector, which is expected to grow by 48.2%, according to LSEG data, as reported by Reuters.
The ongoing AI infrastructure boom is expected to help the broader semiconductor industry this year, with annual sales projected to reach $975 billion globally, according to a Deloitte report.
The report also predicts that generative AI chips will hit revenues of $500 billion in 2026, or roughly half of global chip sales.
As artificial intelligence moves beyond high-end data centers and into everyday devices, the need for specialized AI chips is growing fast. At the same time, demand for memory components like NAND flash and DRAM is picking up again, fueled by more powerful computing needs and AI-driven workloads. Against this backdrop, semiconductor stocks look well-placed to benefit from near-term growth opportunities.
5 Semiconductor Stocks With Growth Potential
NVIDIA Corporation
NVIDIA Corporation is the worldwide leader in visual computing technologies and the inventor of the graphics processing unit, or GPU. Over the years, NVDA’s focus has evolved from PC graphics to AI-based solutions that now support high-performance computing, gaming and virtual reality platforms.
NVIDIA has an expected earnings growth rate of 69% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 8.5% over the last 60 days. NVDA currently has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Microchip Technology
Microchip Technology has been consistently benefiting from its strength in the analog and microcontroller businesses. MCHP’s dominance in 8, 16, and 32-bit PIC microcontrollers remains a major driver of top-line and bookings growth. Microchip Technology has acquired notable companies like Tekron International, Microsemi and Atmel to add strength to its product offerings.
Microchip Technology’s expected earnings growth rate for the current year is 20.6%. The Zacks Consensus Estimate for current-year earnings has improved 1.3% over the past 60 days. MCHP currently has a Zacks Rank #2 (Buy).
Texas Instruments
Texas Instruments is an original equipment manufacturer of analog, mixed-signal and digital signal-processing integrated circuits. TXN has manufacturing and design facilities, including wafer fabrication and assembly/test operations in North America, Asia and Europe. Management strategy has been to build assets that would be fully utilized through their lifetimes and outsource any excess demand in peak situations to outside foundries.
Texas Instruments’ expected earnings growth rate for the current year is 33.8%. The Zacks Consensus Estimate for current-year earnings has improved 14.6% over the past 60 days. TXN carries a Zacks Rank #1.
RF Industries, Ltd.
RF Industries, Ltd. is engaged in the design, manufacture and distribution of coaxial connectors used in radio communications applications as well as in computers, test instruments, PC LANS and antenna devices.
RF Industries’ expected earnings growth rate for the current year is 45%. The Zacks Consensus Estimate for current-year earnings has improved 34.9% over the past 60 days. RFIL presently has a Zacks Rank #2.
Analog Devices
Analog Devices is an original equipment manufacturer of semiconductor devices, specifically analog, mixed-signal and digital signal processing (“DSP”) integrated circuits. ADI’s product line comprises amplifiers and comparators; analog to digital converters; digital to analog converters; video encoders and decoders; embedded processing products and DSPs; MEMS and temperature sensors; RF/IF components and converters; power and thermal management ICs, audio/video converters, amplifiers, CODECs, filters and processors. Analog Devices also offers analog, digital and RF switches and multiplexers; analog microcontrollers; clock and timing products.
Analog Devices’ expected earnings growth rate for the current year is 46.1%. The Zacks Consensus Estimate for current-year earnings has improved 1.4% over the past 60 days. ADI currently carries a Zacks Rank #2.