11 Most Undervalued Semiconductor Stocks to Buy According to Analysts

7. Onto Innovation Inc. (NYSE:ONTO)

Forward P/E: ~19.7x

Average Upside Potential: ~34.2%

Number of Hedge Fund Holders: 31

Onto Innovation Inc. (NYSE:ONTO) is one of the Most Undervalued Semiconductor Stocks to Buy According to Analysts. On June 30, the company announced that it had entered into a definitive agreement for the acquisition of the materials analysis business of Semilab International for $475 million in cash and 706,215 shares of Onto Innovation Inc. (NYSE:ONTO) common stock. The acquisition adds 4 complementary product lines offering inline wafer contamination monitoring as well as materials interface characterization.

With the use of exotic materials in semiconductor manufacturing expanding rapidly, the demand for advanced materials analysis continues to grow significantly. Furthermore, the acquisition aligns with Onto Innovation Inc. (NYSE:ONTO)’s strategy to excel in high-growth, high-margin segments of the semiconductor value chain, mainly areas where device complexity has been accelerating, like the production of chips needed for AI applications. The transaction is anticipated to be immediately accretive to both gross and operating margins and to improve non-GAAP EPS by over 10% in the first year following close, adding more than $130 million to Onto Innovation Inc. (NYSE:ONTO)’s annual revenue.

Invesco Distributors, Inc., an investment management firm, released Q4 2024 investor letter. Here is what the fund said:

“Onto Innovation Inc. (NYSE:ONTO): The company is a semiconductor capital equipment manufacturer that provides process control solutions for microelectronics manufacturing, including defect inspection, metrology systems and software to enhance yield and reduce costs. The company has benefited from the artificial intelligence (AI) boom, but weakness during the quarter provided an attractive entry point for the fund.”