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 14.1% has outpaced the S&P 500’s 8.6% 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 that may face trouble.

One Semiconductor Stock to Sell:

Himax (HIMX)

Market Cap: $1.37 billion

Taiwan-based Himax Technologies $(HIMX)$ is a leading manufacturer of display driver chips and timing controllers used in TVs, laptops, and mobile phones.

Why Does HIMX Give Us Pause?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 3.5% annually over the last two years
2. Projected sales for the next 12 months are flat and suggest demand will be subdued
3. Expenses have increased as a percentage of revenue over the last five years as its operating margin fell by 15.2 percentage points

Himax’s stock price of $7.80 implies a valuation ratio of 20.1x forward P/E. To fully understand why you should be careful with HIMX, check out our full research report (it’s free).

Two Semiconductor Stocks to Watch:

MACOM (MTSI)

Market Cap: $9.39 billion

Founded in the 1950s as Microwave Associates, a communications supplier to the US Army Signal Corp, today MACOM Technology Solutions $(MTSI)$ is a provider of analog chips used in optical, wireless, and satellite networks.

Why Do We Like MTSI?

1. Annual revenue growth of 15.8% over the last two years was superb and indicates its market share increased during this cycle
2. Projected revenue growth of 18.7% for the next 12 months is above its two-year trend, pointing to accelerating demand
3. Earnings per share have massively outperformed its peers over the last five years, increasing by 41.3% annually

At $128.08 per share, MACOM trades at 32.2x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.

Micron $(MU)$

Market Cap: $131.7 billion

Founded in the basement of a Boise, Idaho dental office in 1978, Micron (NYSE:MU) is a leading provider of memory chips used in thousands of devices across mobile, data centers, industrial, consumer, and automotive markets.

Why Could MU Be a Winner?

1. Annual revenue growth of 36.4% over the last two years was superb and indicates its market share increased during this cycle
2. Exciting sales outlook for the upcoming 12 months calls for 40% growth, an acceleration from its two-year trend
3. Performance over the past five years shows its incremental sales were more profitable, as its annual earnings per share growth of 22.8% outpaced its revenue gains

Micron is trading at $117.88 per share, or 11.7x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.

Stocks We Like Even More

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