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Top 3 undervalued semiconductor stocks

Top 3 undervalued semiconductor stocks
Elmaz Sabovic

As the stock market experienced a streak of gains that extended this year, the AI industry seems to do all the heavy lifting, which has caused semiconductor stocks to skyrocket in value, with a popular example of Nvidia (NASDAQ: NVDA).

However, with all the gains currently adding up, it might seem that the train has departed, and investors have missed the opportunity for gains.

This might not necessarily be true, as Finbold has analyzed the semiconductor industry and its subsidiaries to track down stocks still undervalued by the general market and traders.

MediaTek (TPE: 2454)

MediaTek Inc. (TPE: 2454) is a Taiwanese fabless semiconductor company that provides chips for various applications, including wireless communications, high-definition television, and handheld mobile devices like smartphones and tablet computers.

MediaTek experienced a 70% increase in revenue from its flagship chips last year, attributed mainly to the success of the Dimensity 9300 System on Chip (SoC), which grossed over $1 billion. The company forecasts further double-digit growth in flagship chip revenue for the current year.

According to analysts Charlie Chan and Daisy Dai from Morgan Stanley (NYSE: MS), the Dimensity 9300 emerges as the market’s most potent smartphone System on Chip (SoC) presently utilized. They anticipate MediaTek’s market share to increase to 35% during 2024, a notable rise from the 20% share it held last year.

This stock added 28.18% to its value in the previous year, settling at $29.88 (937 TWD) at the time of writing.

MediaTek 1-year stock price chart. Source: Google Finance
MediaTek 1-year stock price chart. Source: Google Finance

Skyworks Solutions Inc (NASDAQ: SWKS)

Skyworks Solutions, Inc. (NASDAQ: SWKS) is a semiconductor company based in California and is included in the S&P 500 index. It is renowned for manufacturing chips primarily designed for mobile devices. Notably, Apple (NASDAQ: AAPL) stands as one of its major clients.

In Q1 of fiscal 2024, Skyworks reported revenue of $1.2 billion and earnings per share of $1.97. The company achieved record operating cash flows of $775 million and free cash flows of $753 million.

Furthermore, the company remains actively engaged in seeking value-accretive partnerships. Recent notable deals include the expansion of its WiFi design pipeline through strategic collaborations with prominent partners such as Cisco Systems (NASDAQ: CSCO), Linksys, and TP-link.

In the previous 365 days, this stock has suffered a drawback of -11.19%, putting its price at $107.28 since the last closure.

SWKS 1-year stock price chart. Source: Finbold
SWKS 1-year stock price chart. Source: Finbold

Aehr Test Systems (NASDAQ:AEHR)

Aehr Test Systems (NASDAQ: AEHR) is a renowned global provider of test systems designed to burn in and test logic, optical, and memory-integrated circuits.

Market watchers and investors have closely followed AEHR’s shares this year due to its provision of testing equipment and services for electric vehicle (EV) microchip components. Despite benefiting from solid demand amid continued interest in EVs, including from major players like Tesla (NASDAQ: TSLA), AEHR shares have declined over -44% in the past year amidst speculation of an EV market slowdown.

However, it’s important to note that testing EV components is just one of AEHR’s markets. The company also designs equipment for testing silicon photonics devices, offering an alternative to traditional fiber optic transceivers used in data centers and telecommunications.

The last 12 months haven’t been kind to this stock’s price, as it suffered a decline of -44.21%, which put its price at $17.74 since the markets opened on February 12.

AEHR 1-year stock price chart. Source: Google Finance
AEHR 1-year stock price chart. Source: Google Finance

While some of these stocks might be undergoing drawbacks and a seemingly bleak outlook, their fundamentals and revenue report pose an argument for a solid future performance, especially considering the expanding demand in the AI and semiconductor industries.

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