At this point, directly betting against semiconductor stocks – especially if they’re named Nvidia (NASDAQ:NVDA) – should first come with a warning. The sector continues to defy gravity, with demand seemingly pointing to a limitless ceiling.
Nevertheless, one must figure that even mighty Nvidia will reach a saturation level where the upside returns can no longer justify the downside risks. However, we know that technology continues to march perpetually forward, which puts investors in a quandary. Still, I should bring up the obvious point: there are other semiconductor stocks besides NVDA that you can buy.
No, they’re not going to be as sexy as the graphics processor specialist. However, the expectations aren’t as sky high, potentially translating to a less-acute risk-reward profile. Moreover, they can ride the coattails of NVDA. With that in mind, below are semiconductor stocks that are away from the spotlight.
KLA Corp (KLAC)
Based in Milpitas, California, KLA Corp (NASDAQ:KLAC) falls under the semiconductor equipment and materials category. Per its public profile, the enterprise designs, manufacturers and markets process control, process enabling and yield-management solutions for the chipmaking and electronics industries worldwide. It provides multiple “background” services, such as identifying and analyzing defects on wafers.
Financially, KLA is not a showman type of investment. However, it offers consistency. Between the second quarter of 2023 to Q1 2024, the company’s average earnings surprise landed at 6.7%. In the trailing 12 months (TTM), KLA posted net income of $2.61 billion on sales of $9.6 billion. Presently, its quarterly revenue growth (year-over-year) comes out to a loss of 3%.
To be sure, fiscal 2024 may be a disappointment, with experts anticipating earnings per share of $23.28 on sales of $9.78 billion. That comes out to a loss of 8.2% in the bottom line and 6.8% in the top line. However, fiscal 2025 could see EPS rise to $28.40 on revenue of $11.13 billion. Thus, it’s one of the non-NVDA semiconductor stocks to consider.
Applied Materials (AMAT)
Headquartered in Santa Clara, California, Applied Materials (NASDAQ:AMAT) engages in the provision of manufacturing equipment, services and software to the semiconductor, display interface and related industries. It offers various equipment and services to help fabricate computer chips or integrated circuits. It also provides specialized technologies to improve performance and productivity.
Financially, Applied Materials offers a similar level of consistency like KLA Corp, but at a higher threshold. In the past four quarters since fiscal Q1 2024, the company posted an average earnings surprise of 8.13%. During the TTM, Applied posted net income of $7.3 billion on sales of $26.5 billion. Currently, its quarterly sales growth rate sits at only 0.2%.
Fiscal 2024 might not be the greatest cycle for AMAT. Analysts anticipate a 3.85% decline in EPS to $7.74 and a 6.2% drop in the top line to $24.89 billion. That said, the high-side target calls for EPS of $7.98 on revenue of $25.2 billion.
Moreover, in fiscal 2025, experts believe EPS could soar to $8.95 with a top line of $27.71 billion. Thus, it’s one of the semiconductor stocks to keep on your radar.
Entegris (ENTG)
Hailing from Billerica, Massachusetts, Entegris (NASDAQ:ENTG) develops, manufactures, and supplies microcontamination control products. It also offers specialty chemicals and advanced materials handling solutions in North America, Taiwan, China and other international markets. While Entegris might not be in the sexiest role in the semiconductor ecosystem, it undoubtedly plays a critical stagehand role.
As with the other semiconductor stocks mentioned earlier, Entegris offers financial consistency. In the past four quarters since Q1, the company’s average positive earnings surprise clocked in at 12.73%. That’s quite impressive. During the TTM period, the enterprise posted net income of $314.1 million on sales of $3.37 billion. However, its quarterly revenue growth rate sits at 16.4% below parity.
For fiscal 2024, experts anticipate a split offering, so to speak. EPS could rise to $3.29, implying 24.6% YOY growth. On the other hand, the top line could erode almost 5% to $3.35 billion. However, fiscal 2025 could see EPS soar to $4.43 on sales of $3.82 billion. Moreover, the blue-sky revenue target could hit $4.03 billion. For speculators, it’s one of the semiconductor stocks to buy.
On the date of publication, Josh Enomoto did not have (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.
