In this article, we will take a look at the most profitable semiconductor stocks to buy.
The semiconductor industry is one of the industries that remains in the spotlight for its importance in the AI supply chain. As the global demand for AI chips surges, both investors and analysts are turning their attention to companies that aren’t only growing but also generating huge profits. In an interview by CNBC in early October, TD Cowen analyst Joshua Buchalter anticipated the sector to “grind higher,” citing the rise of computing power and the continued expansion of AI. The analyst informs stakeholders that the underlying market strengths are strong enough to address any challenges that may arise.
This stance was reinforced by the Semiconductor Industry Association (SIA) report, in early October 2025, highlighting that global semiconductor sales rose 21.7% YoY in August to $64.9 billion. While sales increased across the Asia Pacific/All Other, Americas, China, and Europe, respectively, the Japanese market experienced a decline in sales, SIA revealed.
“Global semiconductor sales continued to grow in August, far exceeding sales in August of last year,” stated John Neuffer, the CEO of the Semiconductor Industry Association. “Sales in the Asia Pacific region and the Americas continue to drive growth, with sales of memory and logic chips notably increasing.”
With that backdrop, let’s look at the most profitable semiconductor stocks to buy.
Our methodology:
To compile a list of the 10 most profitable semiconductor stocks to buy, we utilized Finviz’s stock screener to filter for semiconductor stocks with a market capitalization exceeding $2 billion and an operating margin and net profit margin of at least 15%. From this pool, we shortlisted the top 10 stocks with the highest trailing twelve-month (TTM) net incomes. These stocks were then ranked in ascending order of their respective TTM net incomes. We also included data on hedge fund holdings in these companies based on Insider Monkey’s database, as of Q2 2025.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
10. Arm Holdings plc (NASDAQ:ARM)
Net Income (TTM): $830 million
Operating Margin (TTM): 14.36%
Number of hedge fund holdings: 41
On November 6, analysts at KeyBanc reiterated an ‘Overweight’ rating on Arm Holdings plc (NASDAQ:ARM), while increasing the price target to $200 from $190, implying a potential upside of nearly 26%. This optimism follows the company’s robust second-quarter results, which demonstrated better-than-expected performance in both its royalty and licensing segments.
Royalty growth is primarily attributed to smartphones, as Arm Holdings plc (NASDAQ:ARM) benefited from increased CSS (Compute Subsystem) shipments and higher Armv9 shipments, following the start of Qualcomm’s supply of its upgraded application processors. KeyBanc notes revenue from data centers impressively doubled YoY. Similarly, automotive and IoT businesses also showcased progress, thus contributing to the raised guidance.
The investment firm is confident regarding the company’s position across its key markets. In the second quarter, Arm Holdings plc (NASDAQ:ARM) delivered $1.14 billion in revenue, highlighting a 34% YoY increase. Reinforcing this positive trend, management now anticipates revenue growth of about 25% YoY, royalties over 20% YoY, and licensing revenue between 25% and 30%.
Arm Holdings plc (NASDAQ:ARM) is a U.K.-based company that engages in central processing unit (CPU) products and associated technologies. Incorporated in 1990, the company offers its solutions to semiconductor companies and original equipment manufacturers.
9. United Microelectronics Corporation (NYSE:UMC)
Net Income (TTM): $1.29 billion
Operating Margin (TTM): 18.70%
Number of hedge fund holdings: 17
On November 6, United Microelectronics Corporation (NYSE:UMC) reported its sales figures for October 2025, reflecting only a slight movement in contrast to last year. The semiconductor company posted consolidated unaudited net sales of NT$21.3 billion for the month, showing a 0.36% decline from the October 2024 level.
Despite this dip raising concerns regarding the company’s momentum, the overall picture tells a somewhat different story. Total sales from January to October witnessed a 1.94% increase over the same period last year.
As the management highlighted during the earnings call, United Microelectronics Corporation (NYSE:UMC) observed demand growth across a majority of its market segments. The company particularly benefited from a sales rebound of smartphones and notebooks, which spurred replenishment orders from customers. Additionally, the company’s cutting-edge technology and favorable macro environment contributed to the overall shipment growth.
As stated by Jason Wang, Co-President & Representative Director,
“It’s now that we project the 2025 shipment growth was supported by our differentiated 22-nanometer technology and other specialty offerings across both 12- and 8-inch amid a broad-based market demand recovery.”
United Microelectronics Corporation (NYSE:UMC), headquartered in Hsinchu City, Taiwan, is a semiconductor wafer foundry specializing in integrated circuits. Founded in 1980, the company is dedicated to becoming a leading specialty technology foundry.
