In this article, we will take a look at the small-cap semiconductor stocks to buy according to analysts.
The semiconductor industry is among those driving technological breakthroughs that will shape the future. The rapid rise of demand for AI, data centers, computing, and advanced devices has shaped the outlook of the semiconductor market.
A recent research by Deloitte, published on February 5, titled “2026 Global Semiconductor Industry Outlook,” suggests that the semiconductor industry finds itself navigating a high-stakes paradox this year. The research predicts the global semiconductor industry to achieve $975 billion in annual sales this year. While the growth reached 22% in 2025, it is anticipated to surge to 26% in 2026. By 2036, annual sales could reach US$2 trillion if growth moderates. Additionally, Deloitte forecasts that generative AI chips will generate $500 billion in revenue in 2026, nearly half of global chip sales.
However, with current tensions between the U.S., Israel, and Iran, the supply of major semiconductor manufacturing materials could be adversely impacted. On March 5, Reuters reported that chipmakers are experiencing severe supply bottlenecks due to rising demand from AI data center operators, which has restricted the chip supplies for other sectors. As said by Kim Young-bae, a South Korean ruling party lawmaker, to the reporters,
“Officials raised a possibility that semiconductor production could be disrupted if some of these key materials cannot be sourced from the Middle East.”
Keeping this outlook for the semiconductor industry in mind, we have compiled a list of the 7 small-cap semiconductor stocks to buy according to analysts.
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Our methodology
For this article, we filtered for stocks from two industries: Semiconductors and Semiconductor Equipment & Materials. Next, we narrowed our list to stocks with a market capitalisation between $300 million and $2 billion and an upside potential of at least 10%. We limited our final selection to companies that have recently reported noteworthy developments likely to impact investor sentiment. These stocks were then ranked in ascending order by upside potential.
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 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
7. Alpha and Omega Semiconductor Limited (NASDAQ:AOSL)
As of March 6, Alpha and Omega Semiconductor Limited (NASDAQ:AOSL) has a Neutral or equivalent rating from 67% of the analysts covering the stock, with the remaining 33% bullish on the stock. Among those holding a cautious view on the stock is Tore Svanberg from Stifel, who trimmed the price target on the company to $22 from $24 and maintained a Hold rating on February 6.
On the same day, Craig Ellis, an analyst at B. Riley, also reduced the price target on Alpha and Omega Semiconductor Limited (NASDAQ:AOSL) from $24 to $19 and maintained a Neutral rating. While Q1 results showed upside in sales, both gross margin and EPS lagged.
In a research note, Ellis noted potential growth in PC and smartphone content this year, adding that EPS pressure in the short term could be due to a 25% YoY surge in R&D to accelerate advanced compute and AI socket projects. The returns are anticipated as revenue growth picks up in CY27, B. Riley concluded.
Alpha and Omega Semiconductor Limited (NASDAQ:AOSL), incorporated in 2000, is a California-based company specializing in power semiconductor products for applications in computing, consumer electronics, communications, and industrials.
6. Cohu, Inc. (NASDAQ:COHU)
On February 13, Needham lifted the price target on Cohu, Inc. (NASDAQ:COHU) to $33 from $30 and reiterated a Buy rating. This price target hike comes even after the reported Q4 2025 revenue that matched the estimates, but non-GAAP gross margins were meaningfully lower than the projection. This happened because of a one-time inventory charge, which represents 350 basis points of the total 420-basis-point shortfall.
For Q1 2026, Cohu, Inc. (NASDAQ:COHU) projects revenue to be flat QoQ, with non-GAAP gross margins anticipated to recover to nearly 45%. The firm pointed to a major data center design win at an analog/mixed-signal customer, expected to generate additional revenue in 2026, in addition to current High Bandwidth Memory and AI compute applications. With that said, Needham advised “buying the dip” in the stock and raised its forecasts.
On the same day, TD Cowen said the quarter miss can be ignored, but a roughly flat QoQ outlook will likely leave some disappointed. The firm’s analyst, Krish Sankar, raised the price target on Cohu, Inc. (NASDAQ:COHU) to $35 from $30 and maintained a Buy rating, citing healthy trends in its core financials.
Cohu, Inc. (NASDAQ:COHU) is a California-based provider of semiconductor test equipment and services. Founded in 1947, the company also provides AI process control and analytics-based monitoring software.
5. Ambiq Micro, Inc. (NYSE:AMBQ)
On March 6, BofA lifted the price target on Ambiq Micro, Inc. (NYSE:AMBQ) to $35, up from $32, and reiterated a Neutral rating. According to the firm, the company has solid demand through Q3, with over 80% of its 2025 shipments utilizing AI algorithms. The firm associated the price target uplift with the current momentum, adding that the company’s robust demand environment is offset by muted EPS leverage.
A day earlier, Needham reaffirmed a Buy rating and a price target of $48 on Ambiq Micro, Inc. (NYSE:AMBQ) following the company’s Q4 2025 performance. The firm highlighted that the company’s results outperformed expectations, with raised guidance driven by better-than-anticipated demand across several product offerings.
What’s interesting is that Ambiq Micro, Inc. (NYSE:AMBQ) has revealed a new global wearable customer expected to start production in Q1 2026 and contribute significantly to growth this year and next. Additionally, the company disclosed enhanced technical specifications for its Atomiq platform. To support its plans, operating expenses are expected to climb by nearly $30 million YoY in FY26.
Ambiq Micro, Inc. (NYSE:AMBQ) is a Texas-based company providing ultra-low-power semiconductor solutions, as well as technical support services. Incorporated in 2010, the company offers its products through an internal direct sales force, distributors, and sales representatives.
4. Daqo New Energy Corp. (NYSE:DQ)
On March 4, Roth Capital trimmed the price target on Daqo New Energy Corp. (NYSE:DQ) from $30 to $25 and maintained a Neutral rating, according to TheFly. This comes after the company’s fourth-quarter results, which the firm describes as “mixed.” While the company reported a revenue miss, EBITDA outperformed the consensus estimate. Thus, the firm is staying on the sidelines until there is greater clarity on industry reforms.
Previously, on February 26, Daqo New Energy Corp. (NYSE:DQ) announced its Q4 results, disclosing a narrowed net loss of $7.3 million and an EPS of -$0.11. The company’s EPS exceeded analyst forecasts of -$0.26. Despite a decline in revenue, the company experienced enhanced financial performance for the full year 2025.
What’s even more interesting is the company’s emphasis on cost efficiency, which resulted in a positive $1.7 million EBITDA. This is particularly significant considering the negative $337.4 million EBITDA in 2024. Looking ahead, Daqo New Energy Corp. (NYSE:DQ) expects production in the range of 140,000 to 170,000 metric tons in 2026, implying a market rebound.
Daqo New Energy Corp. (NYSE:DQ) is a provider of polysilicon to photovoltaic product manufacturers. The company’s products are utilized in ingots, wafers, and modules for solar power solutions.
3. Arteris, Inc. (NASDAQ:AIP)
On February 20, Gus Richard, an analyst at Northland, pointed out that Arteris, Inc. (NASDAQ:AIP) shares are under pressure following the ATM announcement, TheFly reported. The firm does not see a need for the company to raise capital. While describing the stock “a top pick” for 2026, the analyst reaffirmed a price target of $24.
Earlier on February 13, Richard had lifted the price target on Arteris, Inc. (NASDAQ:AIP) to $24 from $21 and maintained an Outperform rating. This price target boost is due to the firm’s revised forward estimates, after “a record-breaking quarter in bookings.”
When Arteris, Inc. (NASDAQ:AIP) delivered its Q4 2025 results on February 12, it exceeded both revenue and EPS estimates. The company’s revenue of $20.1 million outperformed the analyst expectations of $18.55 million, and EPS of -$0.05 was above the forecasted -$0.07. In 2026, the company projects revenue growth in the range of $89 million to $93 million.
Arteris, Inc. (NASDAQ:AIP) is a California-based provider of semiconductor system intellectual property solutions. The company also offers professional and licensing services, IP support and maintenance, and on-site support services.
2. CEVA, Inc. (NASDAQ:CEVA)
On February 25, UBS started coverage on CEVA, Inc. (NASDAQ:CEVA) with a Buy rating and a price target of $27. With the lowest 1-year price target among analysts, the firm’s estimate reflects an upside potential of 41.14%.
The firm said that the company’s wireless and connectivity business accounts for nearly 70% market share, adding that CEVA, Inc. (NASDAQ:CEVA) will benefit from the expanding connected edge AI devices. UBS expects the company’s royalties to rise to about three times or more per chip. For 2026, the firm forecasts an EPS of $0.55, with net income likely to grow following earlier losses. The company appears to be trading at a discount to its peers as valuation could be enhanced with accelerating AI compute revenues, UBS highlighted.
When CEVA, Inc. (NASDAQ:CEVA) reported its Q4 2025 earnings on February 17, management highlighted the company’s solid positioning for the “physical AI era,” noting that AI procedural licensing substantially contributed to licensing revenue in 2025.
CEVA, Inc. (NASDAQ:CEVA) is a Maryland-based provider of silicon and software intellectual property (IP) solutions. Founded in 1999, the company serves semiconductor and original equipment manufacturer companies.
1. indie Semiconductor, Inc. (NASDAQ:INDI)
On February 23, UBS cut the price target on indie Semiconductor, Inc. (NASDAQ:INDI) to $4.25 from $5 and maintained a Neutral rating. Additionally, the firm trimmed its EPS projections from $0.28 to $0.27, while raising its estimates for 2028 and beyond.
UBS anticipates indie Semiconductor, Inc. (NASDAQ:INDI) to deliver sequential growth due to its Tier 1 77GHz radar ramp. With revenue expectations of nearly $80 million at year-end, or approximately $55 million excluding Wuxi, the firm projects revenue will grow from $124 million excluding Wuxi to more than $620 million in 2028. From radar to modest contributions from Quantum robotics and eMotion3D, the firm listed many catalysts behind this outlook.
Moreover, UBS estimates gross margin to progress to about 53% at year-end. This will particularly be driven by the acceleration of advanced driver assistance systems. The firm expects indie Semiconductor, Inc. (NASDAQ:INDI) to report a small EPS loss in Q3 before it turns positive in the subsequent quarter.
indie Semiconductor, Inc. (NASDAQ:INDI) is a California-based provider of automotive semiconductors and software solutions. Founded in 2007, the company offers advanced driver assistance systems, autonomous vehicles, and electrification applications, among others.
While we acknowledge the potential of INDI 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 INDI and that has 100x upside potential, check out our report about this cheapest AI stock.
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Disclosure: None.
