Semiconductor sales skyrocketed in the first quarter of 2025 despite price challenges and threats from the emergence of DeepSeek, a low-cost AI model from China. Also, sales grew month over month in March after declining in the first two months of the year.

Optimism surrounding artificial intelligence (AI), particularly generative AI, fueled semiconductor sales last year, and this year too has been no different.

Given this scenario, it would be ideal to invest in semiconductor stocks such as Semtech Corporation SMTC, Magnachip Semiconductor Corporation MX, ASML Holding N.V. ASML and Advanced Energy Industries, Inc. AEIS. Each of these stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Semiconductor Revenues Grow Sharply

The Semiconductor Industry Association (SIA) said on Monday that global semiconductor revenues totaled $167.7 billion in the first quarter of 2025, up 18.8% from year-ago levels. Although revenues were down by a marginal 2.8% from the fourth quarter of 2024, month-over-month sales jumped 1.8% in March, totaling $54.9 billion.

John Neuffer, SIA president and CEO, said, “Global semiconductor demand remains high, with first-quarter sales substantially outpacing the first quarter of last year. Year-to-year sales increased by more than 17% for the 11th consecutive month, driven by a year-to-year sales increase of roughly 45% in the Americas.”

The first-quarter figures come after semiconductor revenues jumped a staggering $627.6 billion in 2024, an increase of 19.1% from the previous year’s total of $526.8 billion. A major factor behind the steady rise in sales has been the growing demand for semiconductors at data centers. The memory chip market has been contributing significantly in boosting revenues. An increasing number of tech companies are investing heavily in AI, and those who have integrated AI into their products have witnessed substantial growth.

Industry experts remain confident about AI’s future potential, predicting continued demand as more chipmakers move into the AI arena. The Semiconductor Industry Association previously projected double-digit growth in 2025, further boosting optimism about the sector’s ongoing expansion.

4 Semiconductor Stocks With Upside

Semtech Corporation

Semtech Corporation designs, manufactures and markets a wide range of analog and mixed-signal semiconductors for commercial applications. SMTC’s product line comprises Signal Integrity Products, Protection Products, Power and High-Reliability Products, Wireless and Sensing Products, and Systems Innovation Group.

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Semtech’s expected earnings growth rate for the current year is 93.2%. The Zacks Consensus Estimate for current-year earnings improved 2.4% over the past 60 days. SMTC presently carries a Zacks Rank #2.

Magnachip Semiconductor Corporation

Magnachip Semiconductor Corporation operates as a designer and manufacturer of analog and mixed-signal semiconductor products for high-volume consumer applications. MX operates through three key segments: Display Solutions, Power Solutions and Semiconductor Manufacturing Services.

Magnachip Semiconductor Corporation’s expected earnings growth rate for the current year is 14.3%. The Zacks Consensus Estimate for current-year earnings has improved 34% over the past 60 days. MX currently carries a Zacks Rank #2.

ASML Holding N.V.

ASML Holding N.V. is a world leader in the manufacture of advanced technology systems for the semiconductor industry. ASML offers an integrated portfolio for manufacturing complex integrated circuits. ASML Holdingdesigns, develops, integrates, markets and services advanced systems used by customers, which are the major global semiconductor manufacturers, to create chips that power a wide array of electronic, communications and information technology products.

ASML Holding’s expected earnings growth rate for the current year is 30.8%. The Zacks Consensus Estimate for current-year earnings has improved 8.2% over the past 60 days. ASML currently carries a Zacks Rank #2.

Advanced Energy Industries, Inc.

Advanced Energy Industries, Inc. is one of the leading suppliers of power subsystems and process-control technologies to the semiconductor industry. AEIS now focuses primarily on power-conversion solutions, including direct current, pulsed DC, low frequency, high voltage, and radio frequency (RF) power supplies, as well as matching networks and remote plasma sources for reactive gas applications and RF instrumentation to leverage the semiconductor, flat panel display, and industrial markets.

Advanced Energy Industries’ expected earnings growth rate for the current year is 31.8%. The Zacks Consensus Estimate for current-year earnings has improved 3.8% over the past 60 days. AEIS currently carries a Zacks Rank #2.

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