In this article, we will look at the 10 Must-Buy Semiconductor Stocks to Invest In Now.
On May 19, Ed Yardeni of Yardeni Research appeared on CNBC’s “Closing Bell” to talk about the stock and bond markets and the economic outlook.
He thinks that the bond market is calling for the Fed to hike interest rates in July, as his belief is that the reason bond yields have gone up is because of the perception that the Fed is behind the curve on inflation. The Fed has to clearly show that they are dropping their easing bias, which is what they had in their April meeting, and move to not just a Neutral bias but a tightening bias at the June meeting.
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After that, he believes they have to follow up and show that they are willing to raise rates and do it by 25 basis points. The two-year is now indicating that the Federal funds rate is too low, as the range is 3.5 to 3.75%, and the US two-year treasury is at 4.1%, and that is a pretty good leading indicator of what the Fed should do, and very often, it gets it right. Yardeni further stated that the Fed doesn’t really want to get behind the market, as being behind the market is very much being behind the curve, because the market is certainly looking at the CPI and PPI that just came out.
With these broader market trends in view, let’s look at the must-buy semiconductor stocks to invest in now.
Our Methodology
We used the Finviz stock screener to identify the best semiconductor stocks with strong analyst upside potential, and selected the top 10 that are most popular among hedge funds as of Q4 2025, using the hedge fund sentiment data from Insider Monkey’s database. The stocks are arranged in ascending order of hedge fund sentiment.
Note: All data was recorded on May 20.
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 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).
10 Must-Buy Semiconductor Stocks to Invest In Now
10. Himax Technologies, Inc. (NASDAQ:HIMX)
Number of Hedge Fund Holders: 11
Himax Technologies, Inc. (NASDAQ:HIMX) is one of the top must-buy semiconductor stocks to invest in now. Baird lifted the price target on Himax Technologies, Inc. (NASDAQ:HIMX) to $30 from $10 on May 8, maintaining an Outperform rating on the shares. The rating update came after the company reported financial results for fiscal Q1 2025, reporting that EPS surpassed the guidance range and both revenue and GM came in at the high end of the guidance range.
Revenue for the quarter was $199.0 million, reflecting a slight sequential decline of 2.0%. GM for fiscal Q1 reached 30.4%, at the high end of guidance of flat to slightly down from 30.4% in the previous quarter. In addition, fiscal Q1 2026 after-tax profit was $8.0 million, or 4.6 cents per diluted ADS, surpassing the guidance range of 2.0 to 4.0 cents.
Management further reported that the company expects revenue to increase 10.0% to 13.0% QoQ in its fiscal Q2 2026 guidance, with gross margin expected to be around 32% and profit per diluted ADS to be 8.6 cents to 10.3 cents.
Himax Technologies, Inc. is a semiconductor solution provider involved with display imaging processing technologies. The company’s operations are divided into the Driver Integrated Circuit and Non-Driver Products segments.
9. ASE Technology Holding Co., Ltd. (NYSE:ASX)
Number of Hedge Fund Holders: 18
ASE Technology Holding Co., Ltd. (NYSE:ASX) is one of the top must-buy semiconductor stocks to invest in now. ASE Technology Holding Co., Ltd. (NYSE:ASX) announced on May 8 a strategic collaboration with WUS Printed Circuit Co., Ltd. for the construction of a manufacturing facility in the Nanzih Technology Industrial Park, Kaohsiung. Management reported that the two companies plan to jointly deploy resources to expand advanced manufacturing capacity, reinforcing Taiwan’s critical position in the global semiconductor value chain. It further reported that the new facility will focus on advanced packaging processes, which include FOCoS and FCBGA technologies to serve the emerging AI, cloud computing, and autonomous driving applications, while also integrating automation and smart manufacturing processes.
Separately, ASE Technology Holding Co., Ltd. reported its unaudited consolidated financial results for fiscal Q1 2026 on April 29, reporting net revenues of NT$173,662 million for the quarter, up by 17.2% year-over-year and down by 2.4% sequentially. Management reported that net income attributable to shareholders of the parent for fiscal Q1 totaled NT$14,148 million, up from NT$7,554 million in fiscal Q1 2025 and down from NT$14,713 million in fiscal Q4 2025.
ASE Technology Holding Co., Ltd. provides semiconductor manufacturing services and is involved in the development and offering of complete turnkey solutions in IC (Integrated Circuit) packaging, front-end engineering testing, design and production of interconnect materials, wafer probing and final testing, as well as electronic manufacturing services.
8. indie Semiconductor, Inc. (NASDAQ:INDI)
Number of Hedge Fund Holders: 20
indie Semiconductor, Inc. (NASDAQ:INDI) is one of the top must-buy semiconductor stocks to invest in now. UBS lifted the price target on indie Semiconductor, Inc. (NASDAQ:INDI) to $4.75 from $4.25 on May 8, and reiterated a Neutral rating on the shares. In a separate development, indie Semiconductor, Inc. announced on May 11 that it signed a definitive agreement to acquire the fabless CMOS image sensor group from ams OSRAM AG for a total consideration of 40 million euros.
Management reported that the product line has primary operations in Belgium and Portugal, and encompasses intelligent, high‑performance CMOS image sensors for a range of automation, industrial, and physical artificial intelligence (AI) applications. According to the company, the portfolio of products, designs, and IP aligns with indie Semiconductor’s automotive ADAS sensing solutions and bolsters its multimodal sensing capabilities across vision, radar, LiDAR, and ultrasonic.
The consideration includes a cash payment of 35 million euros paid at closing, along with a 5 million euros vendor debt note provided by ams OSRAM, and is subject to customary closing conditions, which include regulatory approvals. The company expects the acquisition to close in fiscal Q3 2026 and be immediately accretive.
indie Semiconductor, Inc. is an autotech company that provides automotive semiconductor and software solutions for Advanced Driver Assistance Systems (ADAS), driver automation, in-cabin, user experience, and electrification applications.
7. Diodes Incorporated (NASDAQ:DIOD)
Number of Hedge Fund Holders: 25
Diodes Incorporated (NASDAQ:DIOD) is one of the top must-buy semiconductor stocks to invest in now. Baird lifted the price target on Diodes Incorporated (NASDAQ:DIOD) to $120 from $100 on May 8, maintaining an Outperform rating on the shares. The company also received a rating update from Truist the same day, with the firm lifting the price target on Diodes Incorporated to $139 from $98 and maintaining a Buy rating on the shares.
The rating updates came after Diodes Incorporated reported its financial results for fiscal Q1 2026, with revenue for the quarter coming up $405.5 million, compared to $332.1 million in fiscal Q1 2025 and $391.6 million in the prior quarter. GAAP gross profit was $128.8 million, compared to $104.7 million in fiscal Q1 2025 and $121.9 million in the prior quarter. Meanwhile, GAAP gross profit margin was 31.8 percent, compared to 31.5 percent in fiscal Q1 2025 and 31.1 percent in the prior quarter.
Diodes Incorporated is involved in the manufacture and supply of application-specific standard products within the broad discrete, logic, analog, and mixed-signal semiconductor markets. The firm’s offerings include rectifiers, diodes, protection devices, transistors, MOSFETs, amplifiers and comparators, functional specific arrays, single gate, dual gate and standard logic, Hall-effect, and temperature sensors. Its operations are divided into the following geographical segments: Asia, the Americas, and Europe.
6. Allegro MicroSystems, Inc. (NASDAQ:ALGM)
Number of Hedge Fund Holders: 28
Allegro MicroSystems, Inc. (NASDAQ:ALGM) is one of the top must-buy semiconductor stocks to invest in now. Allegro MicroSystems, Inc. (NASDAQ:ALGM) received several rating updates following the release of its fiscal Q4 and full-year 2026 results. Mizuho lifted the price target on Allegro MicroSystems, Inc. to $54 from $44 on May 8, maintaining an Outperform rating on the shares. The same day, Evercore ISI also lifted the price target on the stock to $53 from $49 and reiterated an Outperform rating on the shares.
The company finished fiscal year 2026 with solid momentum, delivering a fifth consecutive quarter of sales growth at $243 million. Management reported that on-GAAP EPS nearly tripled year-over-year to $0.17, while sales for the full year grew 23% to $890 million and non-GAAP EPS more than doubled to $0.54.
Mike Doogue, President and CEO of Allegro MicroSystems, Inc. stated that the results show strength in Focus Auto sales, including xEV and ADAS, and Data Center, which reached a record 14% of total Q4 sales, adding that the company is seeing demand trends supporting continued growth as it enters fiscal 2027.
Allegro MicroSystems, Inc. develops and manufactures sensor integrated circuits and application-specific analog power ICs.
5. nLIGHT, Inc. (NASDAQ:LASR)
Number of Hedge Fund Holders: 36
nLIGHT, Inc. (NASDAQ:LASR) is one of the top must-buy semiconductor stocks to invest in now. nLIGHT, Inc. (NASDAQ:LASR) received a rating update from Needham on May 8. The firm lifted the price target on the stock to $80 from $70, and reaffirmed a Buy rating on the shares. In a separate development, nLIGHT, Inc. announced on April 30 plans for the expansion of its existing operations in Torino, Italy, aimed at supporting the increased demand from European and allied customers for locally assembled directed energy solutions.
Management stated that the expanded Torino footprint is anticipated to improve the company’s ability to deliver high‑power laser subsystems and integrated directed energy components tailored to regional operational needs, while simultaneously aligning with European localization, security, and supply‑chain resiliency requirements. It added that the project builds on nLIGHT, Inc.’s established presence in Italy, and also highlights its long-term commitment to support allied defense and security users with mission‑ready laser technology.
nLIGHT, Inc. provides semiconductor and fiber lasers for aerospace and defense, microfabrication, and industrial applications. The company operates through the Laser Products and Advanced Development segments.
4. Tower Semiconductor Ltd. (NASDAQ:TSEM)
Number of Hedge Fund Holders: 46
Tower Semiconductor Ltd. (NASDAQ:TSEM) is one of the top must-buy semiconductor stocks to invest in now. Wedbush lifted the price target on Tower Semiconductor Ltd. (NASDAQ:TSEM) to $300 from $140 on May 14, reiterating a Neutral rating on the shares. The firm stated that it sees the company’s fiscal Q1 results and commentary as positive. It also very much acknowledges that it missed the velocity of the ongoing transition to optical datacenter networking when it made the decision to move to a Neutral view on the stock late last year.
The rating update came after Tower Semiconductor Ltd. announced on May 13 the signing of Silicon Photonics (SiPho) contracts for $1.3 billion for 2027 revenue with its largest customers, along with the receipt of $290 million in customers’ prepayments for capacity reservation. Management stated that the initial commitment is further reinforced by an even larger contractual wafer commitment for 2028, with additional associated prepayments due by January 2027. It also stated that the long-term agreements bolster the company’s strategic position in the rapidly expanding optical connectivity market.
Tower Semiconductor Ltd. provides semiconductor solutions. The company’s offerings also include technology and manufacturing platforms for integrated circuits (ICs) in growing markets, such as automotive, consumer, industrial, medical, mobile, infrastructure, and aerospace and defense.
3. Monolithic Power Systems, Inc. (NASDAQ:MPWR)
Number of Hedge Fund Holders: 50
Monolithic Power Systems, Inc. (NASDAQ:MPWR) is one of the top must-buy semiconductor stocks to invest in now. Needham lifted the price target on Monolithic Power Systems, Inc. (NASDAQ:MPWR) to $1,750 from $1,300 on May 1, maintaining a Buy rating on the shares. The firm told investors in a research note that the company reported a solid beat and raise, supported by growth in the Enterprise Data and Communications segments.
Monolithic Power Systems, Inc. also received a rating update from Truist on May 1. The firm raised the price target on the stock to $1,805 from $1,396 while maintaining a Buy rating on the shares. It told investors in a research note that the company’s fiscal Q1 results surpassed estimates, while fiscal Q2 was guided meaningfully above consensus. It added that growth remains diversified, but the clear driver continues to be data centers/AI, which is shown in both the Enterprise Data & Comms end markets.
Monolithic Power Systems, Inc. is involved in the design, development, and marketing of integrated power semiconductor solutions and power delivery architectures for computing and storage, industrial, automotive, communications, and consumer applications markets.
2. Microchip Technology Incorporated (NASDAQ:MCHP)
Number of Hedge Fund Holders: 61
Microchip Technology Incorporated (NASDAQ:MCHP) is one of the top must-buy semiconductor stocks to invest in now. UBS lifted the price target on Microchip Technology Incorporated (NASDAQ:MCHP) to $130 from $115 on May 8, reiterating a Buy rating on the shares. Microchip Technology Incorporated also received a rating update from Raymond James the same day. The firm raised the price target on the stock to $125 from $90 while maintaining a Strong Buy rating on the shares.
The firm told investors in a research note that the quarter showed continued recovery, with inventory reductions across internal channels, distributors, and customers, along with declining underutilization charges and extending lead times that point towards improving demand consistent with broader analog industry trends. It further stated that although operating expenses are anticipated to increase as incentives normalize, gross margin expansion is expected to more than offset this, which would support EPS growth.
In a separate development, Barclays lifted the price target on Microchip Technology Incorporated to $105 from $80 on May 11, keeping an Equal Weight rating on the shares.
Microchip Technology Incorporated provides semiconductor products. The company’s operations are divided into the Semiconductor Products and Technology Licensing segments.
1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 264
NVIDIA Corporation (NASDAQ:NVDA) is one of the top must-buy semiconductor stocks to invest in now. NVIDIA Corporation (NASDAQ:NVDA) released financial results for fiscal Q1 2027 on May 20, reporting record revenue of $81.6 billion for the quarter, up 20% from the previous quarter and up 85% from a year ago. GAAP and non-GAAP gross margins were 74.9% and 75.0% for the quarter, respectively, while GAAP and non-GAAP earnings per diluted share were $2.39 and $1.87, respectively.
NVIDIA Corporation further reported that the company returned a record level of around $20.0 billion in fiscal Q1 2027 in the form of shares repurchased and cash dividends. It had 38.5 billion remaining under its share repurchase authorization as of the end of the quarter. The company’s Board of Directors also approved an additional $80.0 billion to its share repurchase authorization on May 18, 2026, without expiration. NVIDIA Corporation is also increasing its quarterly cash dividend from $0.01 per share to $0.25 per share of common stock, payable on June 26, 2026, to all shareholders of record on June 4, 2026.
NVIDIA Corporation designs and manufactures computer graphics processors, chipsets, and other multimedia software. It operates in the Compute & Networking and Graphics Processing Unit (GPU) segments.
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