In this article, we will look at the 10 Semiconductor Stocks with Highest Upside Potential Right Now.
On May 11, Eric Van Nostrand, Lazard Asset Management CIO, appeared on CNBC’s ‘Money Movers’ to talk about his inflation outlook, the health of the economy and markets, and more.
Talking about whether we are in a stalemate, he was of the view that we are actually in a couple of “interesting” stalemates right now. One of them, and the one that he is paying close attention to, is the significant disconnect between markets and the global supply picture at present. We are seeing oil prices at the top of their range, while at the same time, the US equities are also at the top of their range. Investors are bullish, and consumers are ready to buy, but we are heading into one of the biggest supply constraints we have seen in years. That is an inflationary combination, and that is one that worries him from a valuation perspective.
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Nostrand further stated that the Fed’s job is as difficult as it has been in most adult investors’ lives today, because its employment and inflation mandates are pulling it in opposite directions. He believes the inflation picture will get considerably worse as the supply shock continues to tighten. His outlook is that markets appear overly optimistic that the conflict in Iran has ended, and the Street is overlooking the continued risks of rising inflation from supply shocks and tariffs. He further said that the Fed may find itself needing to tighten policy against President Trump and the administration’s wishes.
With these broader market trends in view, let’s narrow down and look at the best semiconductor stocks with the highest upside potential right now.
Our Methodology
We used the Finviz stock screener to identify the best semiconductor stocks that analysts are bullish on, and selected the top 10 stocks 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 15.
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 Semiconductor Stocks with Highest Upside Potential Right Now
10. Diodes Incorporated (NASDAQ:DIOD)
Number of Hedge Fund Holders: 25
Upside Potential: 30.4%
Diodes Incorporated (NASDAQ:DIOD) is one of the best semiconductor stocks with the highest upside potential right now. Truist lifted the price target on Diodes Incorporated (NASDAQ:DIOD) to $139 from $98 on May 8, maintaining a Buy rating on the shares. It told investors in a research note that the company is continuing its cyclical recovery with an above-seasonal Q1 result and modestly above-seasonal Q2 guide, adding that the lead times are starting to extend and inventories are declining.
The rating update came after Diodes Incorporated (NASDAQ:DIOD) 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 (NASDAQ:DIOD) 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.
9. Allegro MicroSystems, Inc. (NASDAQ:ALGM)
Number of Hedge Fund Holders: 28
Upside Potential: 31.9%
Allegro MicroSystems, Inc. (NASDAQ:ALGM) is one of the best semiconductor stocks with the highest upside potential right now. Evercore ISI lifted the price target on Allegro MicroSystems, Inc. (NASDAQ:ALGM) to $53 from $49 on May 8, maintaining an Outperform rating on the shares. The rating update came after Allegro MicroSystems, Inc. (NASDAQ:ALGM) announced financial results for its fourth quarter and full fiscal year ended March 27, 2026.
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. (NASDAQ:ALGM) 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. (NASDAQ:ALGM) remains confident in its ability to execute towards its target financial model.
Allegro MicroSystems, Inc. (NASDAQ:ALGM) develops and manufactures sensor integrated circuits and application-specific analog power ICs.
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