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 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.
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. 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. 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. remains confident in its ability to execute towards its target financial model.
Allegro MicroSystems, Inc. develops and manufactures sensor integrated circuits and application-specific analog power ICs.
8. Lattice Semiconductor Corporation (NASDAQ:LSCC)
Number of Hedge Fund Holders: 33
Upside Potential: 23.8%
Lattice Semiconductor Corporation (NASDAQ:LSCC) is one of the best semiconductor stocks with the highest upside potential right now. Baird lifted the price target on Lattice Semiconductor Corporation (NASDAQ:LSCC) to $135 from $120 on May 7, reaffirming an Outperform rating on the shares. The firm stated that it updated its model after fiscal Q1 results.
Lattice Semiconductor Corporation also received a rating update from RBC Capital on May 5. The firm lifted the price target on the stock to $140 from $118, reiterating an Outperform rating on the shares after the company delivered its fiscal Q1 earnings beat and guidance. It further told investors in a research note that the company’s results and outlook were both better, driven by secular growth in Server/AI and a cyclical recovery in Industrial.
RBC Capital further stated that Lattice Semiconductor Corporation’s AMI acquisition is also anticipated to be immediately accretive to gross margins and EPS, although AMI’s top-line growth is currently tracking slightly below the company’s long-term growth.
Lattice Semiconductor Corporation is involved in the development of technologies that are monetized through differentiated programmable logic semiconductor products, design services, system solutions, and licenses. The company’s offerings also include evaluation boards, silicon-based and silicon-enabling products, development hardware, and related intellectual property licensing, services, and sales.
7. Arm Holdings plc (NASDAQ:ARM)
Number of Hedge Fund Holders: 33
Upside Potential: 51.3%
Arm Holdings plc (NASDAQ:ARM) is one of the best semiconductor stocks with the highest upside potential right now. TD Cowen lifted the price target on Arm Holdings plc (NASDAQ:ARM) to $265 from $165 on May 7, reiterating a Buy rating on the shares and stating that the company’s AGI CPU growth narrative got a boost on signs that initial interest doubled to $2B+. However, it also stated that despite that, supply constraints may be a hurdle to fully meeting the demand upside. The firm believes that AGI targets a $100B+ TAM and there’s scope for further silicon revenue upside from yet to be announced programs.
The rating update came after Arm Holdings plc (NASDAQ:ARM) reported on May 6 results for fiscal Q4 and FY26 ended March 31, 2026. The company delivered record-breaking quarterly and full-year results, with fiscal Q4 revenue reaching $1.49 billion and full-year revenue at $4.92 billion. Fiscal year 2026 marked the company’s third consecutive financial year since going public, with more than 20% revenue growth.
Arm Holdings plc (NASDAQ:ARM) is involved in the licensing, research, marketing, and development of systems IP, microprocessors, graphics processing units, physical IP, and associated systems IP, software, and tools. The company’s operations are divided into the following geographical segments: the United Kingdom, the United States, and Other Countries.
6. Monolithic Power Systems, Inc. (NASDAQ:MPWR)
Number of Hedge Fund Holders: 50
Upside Potential: 19.4%
Monolithic Power Systems, Inc. (NASDAQ:MPWR) is one of the best semiconductor stocks with the highest upside potential right now. Monolithic Power Systems, Inc. (NASDAQ:MPWR) received several rating updates following the release of financial results for Q1 ended March 31, 2026. On May 1, TD Cowen lifted the price target on Monolithic Power Systems, Inc. to $1,850 from $1,550 and maintained a Buy rating on the shares. The firm stated that beat/raise as the Enterprise Data outlook for 2026 moves to more than 85%, which points towards accelerating demand across AI infrastructure. It thus believes that rising power content and CPU units are adding to XPU growth.
Monolithic Power Systems, Inc. also received a rating update from Truist the same day, with the firm lifting the price target on the stock to $1,805 from $1,396 while maintaining a Buy rating on the shares. The firm 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.
The company’s products include computers and notebooks, portable electronic devices, wireless LAN access points, monitors, infotainment applications, and medical equipment. Its operations are divided into the following geographical segments: China, the US, Taiwan, and Other.
5. Astera Labs, Inc. (NASDAQ:ALAB)
Number of Hedge Fund Holders: 52
Upside Potential: 38.6%
Astera Labs, Inc. (NASDAQ:ALAB) is one of the best semiconductor stocks with the highest upside potential right now. Barclays lifted the price target on Astera Labs, Inc. (NASDAQ:ALAB) to $200 from $165 on May 7, maintaining an Equal Weight rating on the shares. The firm told investors in a research note that the company has several products ramping across its portfolio over the next two years, helped by broader AI data center networking demand.
The same day, Citi also lifted the price target on Astera Labs, Inc. to $245 from $200 while maintaining a Buy rating on the shares. The firm cited the company’s “beat and raise” quarter for the target boost, telling investors in a research note that Scorpio is continuing to beat expectations.
The rating updates came after Astera Labs, Inc. announced preliminary financial results for fiscal Q1 2026 on May 5, reporting record quarterly revenue of $308.4 million, up 14% quarter-over-quarter and up 93% year-over-year. The company stated that the market-leading PCIe 6 AI fabric and signal conditioning portfolio delivered strong growth during the quarter. GAAP gross margin was 76.3%, while GAAP operating income reached $61.8 million.
Astera Labs, Inc. is a global semiconductor company that provides hardware and software solutions for AI and cloud infrastructure applications to solve memory, data, and networking bottlenecks. The company’s operations are divided into the following geographical segments: Taiwan, China, the United States, and Other.
4. Microchip Technology Incorporated (NASDAQ:MCHP)
Number of Hedge Fund Holders: 61
Upside Potential: 45.4%
Microchip Technology Incorporated (NASDAQ:MCHP) is one of the best semiconductor stocks with the highest upside potential right now. On May 11, Barclays lifted the price target on Microchip Technology Incorporated (NASDAQ:MCHP) to $105 from $80, keeping an Equal Weight rating on the shares. Microchip Technology Incorporated also received a rating update from Raymond James on May 8, lifting 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.
Raymond James also believes that Microchip Technology Incorporated’s differentiated exposure to datacenter and aerospace/defense end markets further bolsters its positioning for a stronger cyclical recovery with improving visibility into margin and earnings expansion over the coming quarters.
Microchip Technology Incorporated provides semiconductor products. The company’s operations are divided into the Semiconductor Products and Technology Licensing segments.
3. Credo Technology Group Holding Ltd (NASDAQ:CRDO)
Number of Hedge Fund Holders: 69
Upside Potential: 22.29%
Credo Technology Group Holding Ltd (NASDAQ:CRDO) is one of the best semiconductor stocks with the highest upside potential right now. Rothschild & Co Redburn initiated coverage of Credo Technology Group Holding Ltd (NASDAQ:CRDO) with a Buy rating on May 1, setting a price target of $206. The firm told investors in a research note that the monetization of generative AI capex will require more intelligent large language models, and the transmission of electrical signals down copper wires will increasingly give way to the transmission of photonic signals down optical fibers.
It also believes the transition marks a new addressable market for optical networking companies, but noted that some of the opportunity has already been discounted by the market. Rothschild & Co Redburn launched the coverage of six names in the AI networking space with four Buys and two Neutrals. For additional reference, in its financial results for fiscal Q3 2026, Credo Technology Group Holding Ltd reported revenue of $407.0 million, reflecting growth of 51.9% quarter over quarter and 201.5% year over year.
Credo Technology Group Holding Ltd develops connectivity solutions and products for the data infrastructure market, with its products including integrated circuits, active electrical cables, and SerDes chiplets.
2. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 224
Upside Potential: 25.5%
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is one of the best semiconductor stocks with the highest upside potential right now. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) announced on May 15 plans to execute the sale of up to 152.0 million common shares of Vanguard International Semiconductor Corporation, or around 8.1% of VIS’ fully-diluted paid-in-capital, through a block trade to financial institutional investors. The company currently has around 27.1% of VIS shares on a fully diluted basis, and anticipates reducing its shareholding to around 19% upon the completion of this share sale.
Taiwan Semiconductor Manufacturing Company Limited does not plan to sell more VIS shares in the foreseeable future and stated that the proposed share sale would not affect the strategic relations between the company and VIS, which includes the outsourcing of interposer production and licensing of GaN technology to VIS.
In a separate development, Taiwan Semiconductor Manufacturing Company Limited and Sony Semiconductor Solutions Corporation announced on May 8 the signing of a non-binding memorandum of understanding to form a strategic partnership to develop and manufacture next-generation image sensors. The two companies aim to establish a joint venture under the proposed partnership to set up development and production lines in Sony’s newly constructed fab in Koshi City, Kumamoto Prefecture.
Taiwan Semiconductor Manufacturing Company Limited is the largest contract semiconductor manufacturer in the world. Some of its prominent customers include semiconductor companies that outsource all or part of their chip production, including Advanced Micro Devices, Nvidia, Broadcom, and more.
1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 264
Upside Potential: 39.6%
NVIDIA Corporation (NASDAQ:NVDA) is one of the best semiconductor stocks with the highest upside potential right now. TD Cowen lifted the price target on NVIDIA Corporation (NASDAQ:NVDA) to $275 from $235 on May 15, reiterating a Buy rating on the shares.
The rating update came as part of an off-cycle compute semiconductor earnings preview, with the firm telling investors in a research note that AI capex dollars are continually moving higher as investors seek the next “bottleneck” to infrastructure builds. It further stated that these circumstances have driven a “bifurcation within the infrastructure trade” as the largest accelerator companies underperform while optical names trade higher on expectations of coming shortages. The firm raised estimates citing ongoing momentum, adding that it now sees $1.3 trillion in data center silicon spending by 2030, up from the previous $1.2 trillion.
In a separate development, Cantor Fitzgerald lifted the price target on NVIDIA Corporation to $350 from $300 on May 14, reiterating an Overweight rating on the shares.
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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