In this piece, we will take a look at the 12 high growth semiconductor stocks that are profitable. For more semiconductor stocks, head on over to 5 High Growth Semiconductor Stocks that are Profitable.
The semiconductor industry is the backbone of the technological world. This is simply due to the principles of computer science, as any gadget, whether it is a small smoke detector or a mega supercomputer, must have a processor or semiconductor to perform the required functions. Therefore, as long as there is technology, the chip sector will be present to power all the devices out there.
However, while on the surface the industry appears to make only chips, the reality is that there a countless different firms that contribute to the manufacturing process. Broadly speaking, the chip sector is divided into several categories such as design equipment manufacturers, product designers, equipment providers, manufacturers, and front end firms that package the final product into usable forms. Together, these make up an ecosystem responsible for transforming sand into a high end processor.
In terms of market value, the semiconductor industry was worth $556 billion in 2021 according to DigiTimes Research, and from then until 2030, it is slated to grow at a compounded annual growth rate (CAGR) of 7% to sit a $1 trillion by the end of the forecast period. Out of this estimate, the biggest portion will be for communications and computing devices, according to the research firm. These are products that are used in computers, smartphones, and other products and cover chips such as central processing units (CPUs), graphics processing units (GPUs), and modems. Within the market, the communications sector will grow slower when compared to the broader market through a 6% CAGR to $318 billion, with the computing sector also exhibiting a similar CAGR and sitting at $360 billion by 2030. However, the current gold rush in the electric vehicle segment and the increasing use of electronics will lend the automotive sector a faster than the average growth rate. DigiTimes estimates that this industry will have a whopping 12% CAGR and grow to $145 billion.
Technologically, there are several emerging trends in the industry right now. For instance, the Taiwan Semiconductor Manufacturing Company (NYSE:TSM) is currently engaged in mass producing chips on the 3-nanometer node – which is the most advanced chip making process in the world. At its heels is the chip giant Intel Corporation (NASDAQ:INTC), who, according to statements by its chief executive officer Mr. Patrick Gelsinger, aims to catch up to TSMC in less than two years. On the backend side of things, both Intel and TSMC along with other chipmakers are in a rush to procure the latest chipmaking machines from ASML Holding N.V. (NASDAQ:ASML) before they become short. ASML is the only company capable of making machines used in fabricating advanced chips, and the new equipment, called High-NA, is capable of producing crisper chip designs.
Today, we’ll look at the top profitable semiconductor firms, and those that stand out are Monolithic Power Systems, Inc. (NASDAQ:MPWR), Taiwan Semiconductor Manufacturing Company (NYSE:TSM), and Analog Devices, Inc. (NASDAQ:ADI).
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Our Methodology
We used the Finviz stock screener to pick out which chip firms are highly profitable. The firms are selected based on a net profit margin that is greater than 15%. The net profit margin divides the firm’s net income by its overall sales, and those with a higher percentage earn more cents on each dollar of sales. They were then further sifted through based on a quarterly revenue growth greater than 15%. Finally, the companies’ income statement was analyzed to confirm that the net income is not influenced by a one off event, such as a business unit sale. The final candidates are ranked through their sequential sales growth.
High Growth Semiconductor Stocks that are Profitable
12. SiTime Corporation (NASDAQ:SITM)
Q/Q Sales Growth: 16%
Number of Hedge Fund Holders in Q3 2022: 23
SiTime Corporation (NASDAQ:SITM) is an American company that is headquartered in Santa Clara, California. The firm makes and sells oscillators, resonators, and other chips that are used in sensors, internet of things (IoT) gadgets, and aerospace and defense applications.
SiTime Corporation (NASDAQ:SITM) announced a new product in February 2023 aimed specifically at aerospace applications. This product, according to the firm, can deliver up to 25 times the accuracy of older products for GPS positioning. Insider Monkey’s Q3 2022 survey of 920 hedge funds revealed that 23 had invested in the firm.
SiTime Corporation (NASDAQ:SITM)’s largest investor is Douglas T. Granat’s Trigran Investments which owns 761,454 shares that are worth $77 million.
Along with Taiwan Semiconductor Manufacturing Company (NYSE:TSM), Monolithic Power Systems, Inc. (NASDAQ:MPWR), Taiwan Semiconductor Manufacturing Company (NYSE:TSM), and Analog Devices, Inc. (NASDAQ:ADI), SiTime Corporation (NASDAQ:SITM) is a fast growing profitable chip company.
11. NVE Corporation (NASDAQ:NVEC)
Q/Q Sales Growth: 17.5%
Number of Hedge Fund Holders in Q3 2022: 8
NVE Corporation (NASDAQ:NVEC) designs and manufactures magnetic sensors that are used in mass production machines, medical devices, and IoT gadgets. The firm is based in Eden Prairie, Minnesota.
NVE Corporation (NASDAQ:NVEC)’s trailing twelve month net income sits at $18.2 million, marking a $4 million growth over the fiscal year 2021’s net income. By the end of last year’s third quarter, eight of the 920 hedge funds polled by Insider Monkey had invested in the firm.
NVE Corporation (NASDAQ:NVEC)’s largest investor is Chuck Royce’s Royce & Associates which owns 551,514 shares that are worth $35 million.
10. NXP Semiconductors N.V. (NASDAQ:NXPI)
Q/Q Sales Growth: 20.4%
Number of Hedge Fund Holders in Q3 2022: 52
NXP Semiconductors N.V. (NASDAQ:NXPI) makes and sells several kinds of semiconductors such as applications processors, communications devices, power amplifiers, and security controllers. The firm is based in Eindhoven, the Netherlands.
NXP Semiconductors N.V. (NASDAQ:NXPI)’s revenue in the fourth quarter totaled $3.31 billion, up 8.9% on a YoY basis. Insider Monkey’s Q3 2022 survey covering 920 hedge funds revealed that 52 had held a stake in the company.
Out of these, NXP Semiconductors N.V. (NASDAQ:NXPI)’s largest investor is Israel Englander’s Millennium Management which owns 1.4 million shares that are worth $232 million.
9. Broadcom Inc. (NASDAQ:AVGO)
Q/Q Sales Growth: 20.6%
Number of Hedge Fund Holders in Q3 2022: 74
Broadcom Inc. (NASDAQ:AVGO) is an American chipmaking company that primarily designs communications devices such as modems and radio frequency modules. Other products that are in its portfolio include systems on chips (SoCs) and microcontrollers. The firm is headquartered in San Jose, California.
Broadcom Inc. (NASDAQ:AVGO) reported a massive $11.5 billion in net income for its calendar and fiscal year 2022. This marked a stunning $4.8 billion growth over the $6.7 billion in profit that the firm had posted during 2021. Insider Monkey scoured through 920 hedge fund portfolios for their third quarter of 2022 investments to discover that 74 had invested in the firm.
Ken Fisher’s Fisher Asset Management is Broadcom Inc. (NASDAQ:AVGO)’s largest shareholder. It owns 1.1 million shares that are worth $646 million.
8. Microchip Technology Incorporated (NASDAQ:MCHP)
Q/Q Sales Growth: 23.40%
Number of Hedge Fund Holders in Q3 2022:
Microchip Technology Incorporated (NASDAQ:MCHP) makes and sells embedded semiconductors such as microcontrollers and microprocessors. These enable its customers to use these specialized products in a wide variety of applications such as industrial manufacturing, communications, computing, connectivity, and security tools. The firm’s software products enable engineers to customize their designs.
Microchip Technology Incorporated (NASDAQ:MCHP)’s trailing twelve month net income currently sits at $2 billion. This is nearly double the $1.2 billion in profits that the firm posted in 2021. As part of their third quarter of 2022 investments, 45 of the 920 hedge funds polled by Insider Monkey had invested in the firm.
Microchip Technology Incorporated (NASDAQ:MCHP)’s largest shareholder is Ken Griffin’s Citadel Investment Group which owns 3.7 million shares that are worth $265 million.
7. Onto Innovation Inc. (NYSE:ONTO)
Q/Q Sales Growth: 26.80%
Number of Hedge Fund Holders in Q3 2022: 18
Onto Innovation Inc. (NYSE:ONTO) is a semiconductor equipment firm. Its products enable chipmakers to check their chip manufacturing yield, defects, and other production requirements. It is headquartered in Wilmington, Massachusetts.
DA Davidson increased Onto Innovation Inc. (NYSE:ONTO)’s share price target to $95 from $90 in February 2023 alongside keeping a Buy rating on the shares as it outlined that the firm is poised to further expand into the industry despite near term macroeconomic headwinds. 18 of the 920 hedge funds part of Insider Monkey’s Q3 2022 survey had held a stake in the company.
6. Lattice Semiconductor Corporation (NASDAQ:LSCC)
Q/Q Sales Growth: 30.8%
Number of Hedge Fund Holders in Q3 2022: 35
Lattice Semiconductor Corporation (NASDAQ:LSCC) is a specialized semiconductor company that designs and sells products that are called field programmable gate arrays (FPGAs). This is a heavily growing market fueled by the demand from data centers, as the chips can be customized according to need.
Lattice Semiconductor Corporation (NASDAQ:LSCC)’s net income stood at $178 million during 2022, for a massive $83 million growth over 2021’s $95.9 million of profits. This is evidence of the strong demand for its products in the data center scene. Insider Monkey took a look at 920 hedge fund portfolios for their third quarter of 2022 investments to discover that 35 had invested in the firm.
Brian Ashford-Russell and Tim Woolley’s Polar Capital is Lattice Semiconductor Corporation (NASDAQ:LSCC)’s largest investor. It owns 1.9 million shares that are worth $129 million.
Monolithic Power Systems, Inc. (NASDAQ:MPWR), Lattice Semiconductor Corporation (NASDAQ:LSCC), Taiwan Semiconductor Manufacturing Company (NYSE:TSM), and Analog Devices, Inc. (NASDAQ:ADI) are some of the fastest growing and semiconductor stocks out there.
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Disclosure: None. 12 High Growth Semiconductor Stocks that are Profitable is originally published on Insider Monkey.