10 Most Undervalued Semiconductor Stocks to Invest in

Page 9 of 9

1. Silicon Motion Technology Corp. (NASDAQ:SIMO)

Potential Upside: 41.89%

Forward P/E: 18.19

Number of Hedge Fund Holders: 36

On December 15, Craig-Hallum analyst Anthony Stoss maintained his Buy rating on Silicon Motion Technology Corp. (NASDAQ:SIMO). The company now has a median target price of $120, according to CNN’s compilation of 9 analyst ratings, implying 41.89% upside from current levels.

This median price target is close to $125 price target that Craig Ellis of B. Riley Securities assigned on November 13. The stock rallied nearly 20% after that rating, but is now dropping back to the same level as the broader market declines.

Following the announcement above, the company released the SM8388, a power-efficient SSD controller. Its low power consumption, high performance, high capacity, and relatively low cost make it a leading controller in the market. The enterprise-grade security features further add to the controller’s reliability when deployed in enterprise environments.

With the above development, the company now addresses two key bottlenecks facing companies building AI infrastructure: power costs and memory constraints. As AI workloads generate massive amounts of new data, Nearline SSDs become increasingly important. This is an improvement over HDDs, which can’t meet the performance and power-efficiency requirements of these AI workloads, which is why the stock price rose heading into December.

Silicon Motion Technology Corp. (NASDAQ:SIMO) develops, manufactures, and supplies essential semiconductor equipment to the electronics market, including flash controllers and storage solutions. It is based in Hong Kong, with offices in Taiwan and the United States.

While we acknowledge the potential of SIMO as an investment, 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 SIMO and that has 100x upside potential, check out our report about this cheapest AI stock.

READ NEXT: Goldman Sachs Value Stocks: 10 Stocks to Buy and 14 Best Precious Metals Stocks to Buy Now.

Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.

Page 9 of 9