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.
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 (NASDAQ:LSCC) 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 (NASDAQ:LSCC) 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 (NASDAQ:LSCC) 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. (NASDAQ:MPWR) 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. (NASDAQ:MPWR) 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. (NASDAQ:MPWR) 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.
While we acknowledge the potential of MPWR 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 MPWR and that has 100x upside potential, check out our report about the cheapest AI stock.
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