If You Can Only Buy One Semiconductor Stock in May, It Better Be One of These 3 Names


  • Semiconductor stocks still have a considerable amount of upside potential.
  • ACM Research (ACMR): Its Q4 2023 earnings sparked a surge in its share price, which is still going strong.
  • ASX Technology (ASX): offers a strong dividend and has experienced impressive growth.
  • Photronics (PLAB): Investors are waiting to see Q2 earnings results following a somewhat lackluster first quarter report.
Semiconductor stocks to buy - If You Can Only Buy One Semiconductor Stock in May, It Better Be One of These 3 Names

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The technology industry has been booming over the past year, and many are looking for semiconductor stocks to buy. Semiconductors have been a standout industry. The benchmark ETF for the semiconductor industry as a whole is the VanEck Semiconductor ETF (NASDAQ:SMH), which has returned 69% in the past year, while the S&P 500 has only returned 26% within the same time period.

Semiconductor stocks have been on the cutting edge of innovation, and investors are still very interested in the industry’s ability to adapt and change.

Below, I discuss three semiconductor stocks that may not be very well known compared to industry giants such as Nvidia (NASDAQ:NVDA), Advanced Micro Devices (NASDAQ:AMD), and Intel (NASDAQ:INTC). However, these stocks are up-and-coming stocks that have seen impressive share price appreciation and still hold a decent valuation with room to grow within this rapidly evolving industry.

Here are some semiconductor stocks to buy:

Semiconductor Stocks to Buy: ACM Research (ACMR)

a magnifying glass enlarges the ACM logo on a website
Source: Pavel Kapysh / Shutterstock.com

ACM Research (NASDAQ:ACMR) primarily supplies the semiconductor industry with wafer cleaning and wet processing equipment. It also offers electrochemical plating services.

On May 8, earnings for the first quarter of 2024 were released. Total revenue and net income both doubled year-over-year to $152 million and $22 million, respectively. Earnings for the first quarter beat analyst expectations, similar to Q4 2023.

First-quarter shipments increased by 175% compared to the previous year. The overall outlook for the full year 2024 remained the same: ACMR predicts that total revenue will be between $650 million and $725 million.

Over the past year, its share price has increased by 130%. And it’s still trading at a strong valuation, especially within the semiconductor industry. Its forward P/E ratio is 12.98 times, while the sector average is 23.94 times.

ACMR still offers investors the capabilities of very strong returns, especially if it keeps beating analyst predictions regarding earnings.

ASE Technology (ASX)

Advanced Semiconductor Engineering (ADR) (NYSE:ASX)
Source: Shutterstock

ASX Technology (NYSE:ASX) is a semiconductor and testing company that provides a wide range of industry support services.

Over this past year, its share price has risen by 48%.

On Apr. 25, ASE Technology reported earnings results for the first quarter of 2024, stating that total revenue increased by 1% and net income fell by 2% year over year.

ASE Technology also provides investors with a strong dividend yield, which is an anomaly, particularly for the semiconductor industry. Its dividend is distributed on an annual basis. The most recent dividend given to investors was fifty-six cents per share, paid out on Aug. 3, 2023. Its overall yield at this time is approximately 5%.

Similar to ACMR, ASX is trading at a fair valuation compared to the sector as a whole. Its forward P/E ratio is 17.97 times, while the sector’s median forward P/E is 23.94 times.

ASE Technology has experienced solid share price appreciation and still offers a fair valuation to investors. Definitely one of the best semiconductor stocks to buy, in my opinion.

Photronics (PLAB)

PLAB stock: Electronic board, pen, processor on the background of schematic circuit diagram and photomask for manufacture of printed circuit boards.
Source: Mentor57 / Shutterstock

Photronics (NASDAQ:PLAB) specializes in the production and distribution of photomask technology for use in the manufacturing of integrated circuits and flat panel displays. It sells its products to various semiconductor manufacturers.

Over this past year, its share price has increased by 29%.

On May 22, Photronics reported earnings for the second quarter of 2024, stating that total revenue of $217 million and net income of $56 million fell by 5% year over year.

PLAB also provided guidance for the third quarter, in which it anticipates revenue will be between $221 million and $229 million.

Photoronics has also had some recent leadership changes. Its previous Chief Financial Officer, John Jordan, retired in February. On May 28, Eric Rivera, the interim CFO following John Jordan’s retirement, was named its new CFO.

PLAB is trading at a forward P/E ratio of 13.00 times, while the median sector P/E is 23.94 times.

The recent lackluster earnings report somewhat shocked investors into selling their shares. But, with an improved outlook for the third quarter of 2024 over Q2. PLAB still offers decent potential for investors looking for semiconductor stocks to buy.

As of this writing, Noah Bolton did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Noah has about a year of freelance writing experience. He’s worked with Investopedia dealing with topics such as the stock market and financial news.

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