Semiconductors: they’re the tiny chips that make the digital world tick—from your smartphone to your car’s navigation system. But if you’re eyeing semiconductor stocks, you probably know it’s a rollercoaster industry, especially with all the supply chain dramas and tech cycles. Yet, amid all the noise, some semiconductor companies are flying under the radar and could be diamonds in the rough for investors. So, what are some undervalued semiconductor stocks worth considering right now?
Why Semiconductors Still Matter
Before diving in, it’s good to remember that semiconductors aren’t just some passing fad. Demand is expected to keep growing thanks to AI, 5G, electric vehicles, and just regular tech upgrades. That said, the market often prices in hype, and some stocks are overinflated after a good run. But undervalued stocks? Those might be where you find more reasonable prices—and, potentially, better long-term returns.
Spotting Undervalued Semiconductor Stocks
Undervaluation comes down to a few key things: stocks trading below their intrinsic value or compared to peers, strong fundamentals, solid product pipelines, and promising growth catalysts. Here are a few examples that tick those boxes in 2024:
1. Micron Technology (MU)
Micron is a big name in memory chips—a segment with fits and starts but huge long-term opportunity. Lately, its stock has been lagging even as demand for memory spikes in AI and data centers. The company is investing in new tech and has a relatively low price-to-earnings ratio compared to some peers. If memory demand keeps climbing, Micron’s stock could rebound smartly.
2. ON Semiconductor (ON)
ON has been quietly acquiring companies and expanding in automotive and industrial chips—two sectors with strong future growth. Its valuation is modest, especially given the growing need for power-efficient chips. Investors looking past flashy tech names might find ON’s steady approach appealing.
3. Skyworks Solutions (SWKS)
Known for RF chips used in smartphones and IoT devices, Skyworks has been hit by cyclical slowdowns but possesses solid fundamentals and a diversified product base. At bargain prices, it can be a sleeper pick as 5G and connected devices continue expanding.
What to Watch Before Buying
Buying undervalued stocks can feel good, but caution is key. The semiconductor space is cyclical—meaning revenues and profits can swing widely with tech demand and supply factors. Keep an eye on:
– Earnings reports: Are profits improving or declining?
– Product innovation: Is the company keeping pace with tech shifts?
– Global supply chain: Any major issues or improvements?
– Valuation metrics: Is the stock cheap for a reason, or is it a genuine bargain?
Bottom Line
If you’re willing to ride some waves, undervalued semiconductor stocks can offer a way to tap into the tech future without paying top dollar. Companies like Micron, ON Semiconductor, and Skyworks might be worth a closer look—they combine strong industry positions with valuations that don’t yet reflect their full potential. Just remember: in this world, timing and patience can make all the difference.
