Semiconductors are the silicon backbone of the digital revolution. Compute-intensive AI workloads are also priming them for the next wave of secular growth, so it’s no wonder the industry has outperformed the market over the past six months, delivering returns of 30.6% compared to 11% for the S&P 500.
Although these businesses have produced results lately, investors should tread carefully as not all companies are equipped for the next technological innovation. Taking that into account, here are two semiconductor stocks boasting durable advantages and one we’re swiping left on.
One Semiconductor Stock to Sell:
NXP Semiconductors (NXPI)
Market Cap: $47.46 billion
Spun off from Dutch electronics giant Philips in 2006, NXP Semiconductors (NASDAQ: NXPI) is a designer and manufacturer of chips used in autos, industrial manufacturing, mobile devices, and communications infrastructure.
Why Is NXPI Not Exciting?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 4.4% annually over the last two years
- 10.1 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
At $189.46 per share, NXP Semiconductors trades at 14.4x forward P/E. Check out our free in-depth research report to learn more about why NXPI doesn’t pass our bar.
Two Semiconductor Stocks to Watch:
AMD (AMD)
Market Cap: $374.9 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 Will AMD Beat the Market?
- Impressive 29.9% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Demand for the next 12 months is expected to accelerate above its two-year trend as Wall Street forecasts robust revenue growth of 26.8%
- Earnings growth has massively outpaced its peers over the last five years as its EPS has compounded at 27.9% annually
AMD’s stock price of $221.84 implies a valuation ratio of 41.6x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free for active Edge members.
Qualcomm (QCOM)
Market Cap: $176.4 billion
Having been at the forefront of developing the standards for cellular connectivity for over four decades, Qualcomm (NASDAQ: QCOM) is a leading innovator and a fabless manufacturer of wireless technology chips used in smartphones, autos and internet of things appliances.
Why Are We Fans of QCOM?
- Market share has increased this cycle as its 15.3% annual revenue growth over the last five years was exceptional
- Strong free cash flow margin of 28.9% enables it to reinvest or return capital consistently, and its growing cash flow gives it even more resources to deploy
- Industry-leading 47% return on capital demonstrates management’s skill in finding high-return investments
Qualcomm is trading at $166.49 per share, or 13.7x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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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