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.
8. Monolithic Power Systems, Inc. (NASDAQ:MPWR)
Net Income (TTM): $1.9 billion
Operating Margin (TTM): 26.48%
Number of hedge fund holdings: 41
On November 3, 2025, Sebastien Naji, an analyst at William Blair, reaffirmed a ‘Buy’ rating on Monolithic Power Systems, Inc. (NASDAQ:MPWR), highlighting the company’s strong market presence and growth prospects. A testament to this stance is the company’s third-quarter results, which demonstrate a positive revision to its free cash flow outlook due to lower-than-anticipated capital expenditures.
As Monolithic Power Systems, Inc. (NASDAQ:MPWR) strategically expands into new product lines, particularly robotics sensors, the analyst emphasized the company’s innovation and diversification initiatives. Although revenue from China witnessed a dip, the company continues to maintain a strong position in regions such as Taiwan and the United States, Naji notes.
Despite risks like competition, revenue concentration in China, and the dynamics of the semiconductor industry, Monolithic Power Systems, Inc. (NASDAQ:MPWR) is set to benefit from the AI data center demand surge, according to Naji. This optimism is reinforced by TD Cowen analyst Joshua Buchalter, who maintained a “Buy” rating and increased the price target from $ 1,100 to $ 1,250 on October 31, 2025.
Monolithic Power Systems, Inc. (NASDAQ:MPWR) is a Washington-based company specializing in semiconductor-based power electronics solutions. Founded in 1997, the company serves a range of markets, including automotive, communications, and industrial.
7. Analog Devices, Inc. (NASDAQ:ADI)
Net Income (TTM): $1.96 billion
Operating Margin (TTM): 28.55%
Number of hedge fund holdings: 79
On Tuesday, November 4, BNP Paribas analyst David O’Connor initiated coverage on Analog Devices, Inc. (NASDAQ:ADI) with an ‘Outperform’ rating and a price target of $200.
This positive outlook, implying a potential upside of around 33%, comes ahead of the company’s fiscal fourth-quarter results, scheduled for November 25. The analyst, after studying the company’s highly differentiated product solutions, determined that the products deliver high performance and longevity, all while serving a very fragmented customer base of around 125,000 clients. O’Connor highlights that the company’s “blended ASP of 4x the analog average (40c)” aids Analog Devices, Inc. (NASDAQ:ADI) in driving a top-class gross margin.
Digging deeper, O’Connor noted that despite analog and industrial cycle remaining a “headwind,” there exist signs that part of the chip market is beginning to turn the corner.
“End customers remain cautious on macro/tariff concerns and are managing WCR into year-end,” O’Connor stated. “That said, we are at the trough, inventories are lean and orders are improving slowly, but need a catalyst to jumpstart the upcycle.”
In terms of share price performance, the stock has been on an upward trajectory, gaining around 9% year-to-date. But, it has underperformed the broader market as the NASDAQ Index is up around 21% so far.
Analog Devices, Inc. (NASDAQ:ADI) is a Massachusetts-based company specializing in integrated circuits (ICs), software, and subsystems products. Incorporated in 1965, the company is committed to accelerating human breakthroughs.
6. NXP Semiconductors N.V. (NASDAQ:NXPI)
Net Income (TTM): $2.06 billion
Operating Margin (TTM): 28.24%
Number of hedge fund holdings: 53
On October 29, 2025, Harlan Sur, an analyst at JP Morgan, increased the price target on NXP Semiconductors N.V. (NASDAQ:NXPI) to $245 from $240, while reaffirming a ‘Neutral’ rating on the stock. Including this revision, the previous target translates to a potential upside of nearly 23% from the current price level.
Earlier on October 27, NXP Semiconductors N.V. (NASDAQ:NXPI) delivered its third-quarter results, demonstrating strong performance as revenue surpassed guidance by $23 million. As stated by Rafael Sotomayor, President of the company,
“We maintained good profitability and controlled operating expenses, resulting in healthy fall-through.”
What’s even more interesting is that NXP Semiconductors N.V. (NASDAQ:NXPI) is engaged in various strategic initiatives that management believes will yield meaningful returns from 2028 onwards. The leadership anticipates fourth quarter revenue to $3.3 billion, which reflects 6% YoY and 4% sequential growth, driven by automotive, mobile, and Industrial and IoT businesses.
NXP Semiconductors N.V. (NASDAQ:NXPI) is a Netherlands-based provider of semiconductor products, including microcontrollers, communication processors, and wireless connectivity solutions. Founded in 2006, the giant serves several original equipment manufacturers, contract manufacturers, and distributors.
5. Texas Instruments Incorporated (NASDAQ:TXN)
Net Income (TTM): $5.02 billion
Operating Margin (TTM): 36.74%
Number of hedge fund holdings: 68
On October 22, 2025, Bernstein SocGen Group trimmed the price target on Texas Instruments Incorporated (NASDAQ:TXN) to $160.00 from $180.00, while reaffirming its ‘Market Perform’ rating on the stock. The research firm called the company’s pace of recovery “disappointing,” but acknowledged that a turnaround is indeed underway.
The firm raised questions regarding the company’s 2026 scenario targets for both revenue and margins. Highlighting the company’s management credibility challenges, Bernstein feels that the current guidance of mid-$6 range EPS for the upcoming year is more hopeful than realistic.
During the earnings call on October 21, management of Texas Instruments Incorporated (NASDAQ:TXN) appeared somewhat cautious, admitting that the semiconductor market recovery is continuing at a slower pace. Haviv Ilan, the CEO, emphasized:
“Customer inventories remain at low levels and their inventory depletion appears to be behind us. We are well positioned with capacity and inventory and have flexibility to support a range of scenarios.”
Texas Instruments Incorporated (NASDAQ:TXN), incorporated in 1930, is a Texas-based company that specializes in semiconductors to serve electronics designers and manufacturers. The company, operating through Analog and Embedded Processing segments, is committed to making electronics more affordable.
4. Micron Technology, Inc. (NASDAQ:MU)
Net Income (TTM): $8.54 billion
Operating Margin (TTM): 32.64%
Number of hedge fund holdings: 94
On November 7, 2025, Aaron Rakers, an analyst at Wells Fargo, reiterated an ‘Overweight’ rating on Micron Technology, Inc. (NASDAQ:MU), while increasing the price target to $300 from $220, indicating an upside potential of around 26%. This update followed hosting meetings with CEO Sanjay Mehrotra and EVP, Global Operations Manish Bhatia. The firm acknowledges the company’s strong execution, competitive positioning, and positive dynamics within the industry.
In a client note issued on October 30, 2025, Karl Ackerman, an analyst at BNP Paribas, highlighted that increased spending by tech giants benefits more companies than just the major AI chipmakers. The analyst believes that unprecedented capital (capex) investment is poised to benefit the entire data center supply chain. He named Micron Technology, Inc. (NASDAQ:MU) as among the key beneficiaries.
Earlier, on October 28, Supermicro partnered with Intel and Micron Technology, Inc. (NASDAQ: MU) to develop a system for STAC-M3, utilizing the company’s 9550 SSDs and DDR5 memory. As stated by Alvaro Toledo, Vice President at Micron:
“Our technical collaboration with Supermicro, Intel and KX Software sets new performance records and gives traders the edge they need to win.”
Micron Technology, Inc. (NASDAQ:MU) is an Idaho-based company specializing in memory and storage products. Incorporated in 1978, the company operates through four segments, including the Cloud Memory Business Unit and Core Data Center Business Unit.
3. Broadcom Inc. (NASDAQ:AVGO)
Net Income (TTM): $18.93 billion
Operating Margin (TTM): 31.76%
Number of hedge fund holdings: 156
As reported on November 7, Progressive Investment Management Corp, a long-established investment management firm managed by Carsten Henningsen, increased its position in Broadcom Inc. (NASDAQ:AVGO) through the purchase of 40,677 shares.
Earlier on November 4, Jefferies named Broadcom Inc. (NASDAQ:AVGO) as its ‘Top Pick,’ after removing Nvidia. Given the continuously rising demand for AI chips across hyperscalers, the research firm believes that the company is “at an inflection point.” As stated by analysts led by Blayne Curtis,
“We return to AVGO as our top pick as we see the larger upside to estimates as ASICs hit an inflection point.”
By 2027, the firm predicts Broadcom Inc. (NASDAQ:AVGO) will generate $10 billion in AI-related revenue. Jefferies further highlighted that the company has the potential to scale its AI revenue to between $40 billion and $50 billion from 2028 onward. The analysts concluded by raising the semiconductor giant’s price target to $480 from $415 and labeled it a ‘Franchise Pick.’
Broadcom Inc. (NASDAQ:AVGO), founded in 1961, provides semiconductor devices and infrastructure software worldwide through its Semiconductor Solutions and Infrastructure Software segments.
2. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Net Income (TTM): $50.6 billion
Operating Margin (TTM): 50.58%
Number of hedge fund holdings: 187
As reported on November 10, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) delivered a revenue growth of 16.9% YoY in October, which is lower than the 39.6% increase in September and the slowest pace since February last year. Analysts anticipate the company’s sales to increase by 16% in the current quarter, according to Bloomberg News.
According to the Korean platform Naver, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) has recently begun informing its top clients, including Apple, of potential price increases for some of its advanced nodes. The news has neither been confirmed nor denied by the company’s management.
According to this newsflow, the hikes, reportedly between 8% and 10%, could adversely impact various product categories. The news outlet notes that the nodes in question are below 5 nm and are employed in high-tech devices, primarily smartphones and GPUs. According to these sources (including GuruFocus), the price revision, which may take effect in 2026, will impact multiple chips from Apple’s portfolio.
Industry insiders suggest that the upcoming iPhone 18 series will be more expensive, as this development is expected to increase the cost of the A20 chip. One of the reports from GuruFocus highlighted that suppliers forecast that as soon as mass production starts, the cost of the chip could reach as high as $280, positioning it as Apple’s most valuable component. Thus, the tech giant could share this cost escalation burden with its customers.
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), founded in 1987, is a global foundry for integrated circuits and other semiconductor devices. The core offerings of this Taiwanese company include wafer fabrication processes, mask manufacturing, and engineering support services, among others.
1. NVIDIA Corporation (NASDAQ:NVDA)
Net Income (TTM): $86.6 billion
Operating Margin (TTM): 60.84%
Number of hedge fund holdings: 235
Ahead of NVIDIA Corporation (NASDAQ:NVDA)’s earnings report on November 19, several analysts have reinforced their confidence in the stock over the past couple of days. While BofA analyst Vivek Arya reiterated his Buy rating on November 4, analysts from Loop Capital and Jefferies have not only reaffirmed their optimistic Buy ratings but also raised their price targets, with Loop Capital increasing its target by approximately 40% the day before.
Separately, on November 8, 2025, NVIDIA Corporation (NASDAQ:NVDA) CEO Jensen Huang expressed his confidence in the company, stating that the semiconductor giant is witnessing what he called a “very strong demand” for its innovative Blackwell chips, as its appetite for wafers from TSMC grows.”
At an event hosted by Taiwan Semiconductor Manufacturing, Nvidia’s long-established partner, in Hsinchu, Huang stated,
“Nvidia builds the GPU (graphics processing units), but we also build the CPU (central processing units), the networking, the switches, and so there are a lot of chips associated with Blackwell.”
The “five-trillion-dollar man”, as called by TSMC’s Wei, further acknowledged the support of SK Hynix, Samsung, and Micron in scaling up capacity, while labelling them “incredibly good memory makers.” NVIDIA Corporation (NASDAQ:NVDA) has now obtained the most advanced chip samples from these memory makers, Huang added.
NVIDIA Corporation (NASDAQ: NVDA) is a California-based company that delivers graphics, high-performance computing, and networking solutions. Founded in 1993, the giant operates through Compute & Networking and Graphics segments.
While we acknowledge the potential of NVDA to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than NVDA and that has 100x upside potential, check out our report about this cheapest AI stock.
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