Semiconductors are the silicon backbone of the digital revolution. 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 47.4% has outpaced the S&P 500’s 12.9% 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. Keeping that in mind, here are two resilient semiconductor stocks at the top of our wish list and one best left ignored.
One Semiconductor Stock to Sell:
Texas Instruments (TXN)
Market Cap: $248.6 billion
Headquartered in Dallas, Texas since the 1950s, Texas Instruments (NASDAQ: TXN) is the world’s largest producer of analog semiconductors.
Why Are We Cautious About TXN?
- Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 3% over the last five years was below our standards for the semiconductor sector
- Efficiency has decreased over the last five years as its operating margin fell by 14.2 percentage points
- Earnings per share have contracted by 1.7% annually over the last five years, a headwind for returns as stock prices often echo long-term EPS performance
Texas Instruments is trading at $272.09 per share, or 29.2x forward P/E. Read our free research report to see why you should think twice about including TXN in your portfolio.
Two Semiconductor Stocks to Watch:
Western Digital (WDC)
Market Cap: $178.9 billion
Founded in 1970 by a Motorola employee, Western Digital (NASDAQ: WDC) is a leading producer of hard disk drives, SSDs and flash memory.
Why Are We Positive on WDC?
- Sales outlook for the upcoming 12 months calls for 48.9% growth, an acceleration from its two-year trend
- Operating margin increased by 21.7 percentage points over the last five years as it refined its cost structure
- Free cash flow margin expanded by 23.1 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
At $490.55 per share, Western Digital trades at 26.4x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Nova (NVMI)
Market Cap: $12.43 billion
Headquartered in Israel, Nova (NASDAQ: NVMI) is a provider of quality control systems used in semiconductor manufacturing.
What Makes NVMI Stand Out?
- Annual revenue growth of 23.4% over the last five years was superb and indicates its market share increased during this cycle
- Healthy operating margin of 29% shows it’s a well-run company with efficient processes, and its rise over the last five years was fueled by some leverage on its fixed costs
- Earnings growth has trumped its peers over the last five years as its EPS has compounded at 27.4% annually
Nova’s stock price of $391.15 implies a valuation ratio of 33.8x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.
