In this article, we will take a look at the 8 Cheap Semiconductor Stocks to Buy According to Hedge Funds.
President Donald Trump announced on September 4 that his administration will apply tariffs to imports from companies that are not moving their manufacturing to the United States. Speaking ahead of a dinner with a number of CEOs of leading tech giants, the President said:
“Yeah, I have discussed it with the people here. Chips and semiconductors, we will be putting tariffs on companies that aren’t coming in. e will be putting a tariff very shortly”.
While an exact figure wasn’t provided, a month ago President Trump hinted towards imposing a 100% tariff on imports of semiconductors, though this would not apply to companies that are bringing manufacturing to the States.
Beyond tariffs, the semiconductor industry has several drivers, such as the growing need for generative AI, the expansion of data centers, and the growing use of next-generation process technologies. In that regard, the PC and smartphones semiconductor areas come up as notable growth areas, where AI-enabled devices are predicted to account for half of PC shipments and 30% of smartphone sales by 2025.
Photo by Umberto on Unsplash
Our Methodology
To compile our list of cheap semiconductor stocks favored by hedge funds, we utilized stocks screeners to come up with equities with lower forward price-to-earnings (P/E) ratios relative to the sector median for the semiconductor industry (25.57). We also used the number of hedge fund investors to rank the stocks, as of Q2 2025.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
8. Himax Technologies, Inc. (NASDAQ:HIMX)
Forward P/E Ratio as of September 29: 15.22
Number of Hedge Fund Holders: 13
Himax Technologies, Inc. (NASDAQ:HIMX) ranks among the best cheap semiconductor stocks to buy. Himax Technologies, Inc. (NASDAQ:HIMX) and Liqxtal Technology, a subsidiary, announced on September 17 that they will exhibit defense and aerospace imaging systems at the Taipei Aerospace & Defense Technology Exhibition. The display features a virtual panoramic system that uses Liqxtal’s Pro-Eye technology to simulate a 260-inch screen.
Himax Technologies, Inc. (NASDAQ:HIMX) was also set to showcase biometric sensing systems that integrate its WiseEye PalmVein Module with thermal imaging and structured light 3D sensing technology. Additionally, the company will introduce Liqxtal Dim, which combines AI sensing with liquid crystal light valves to modify light transmission in response to environmental conditions.
Himax Technologies, Inc. (NASDAQ:HIMX) is a Taiwan-based semiconductor company that specializes in display imaging and processing technology.
7. Vishay Intertechnology, Inc. (NYSE:VSH)
Forward P/E Ratio as of September 29: 15.98
Number of Hedge Fund Holders: 23
Vishay Intertechnology, Inc. (NYSE:VSH) ranks among the best cheap semiconductor stocks to buy. Vishay Intertechnology, Inc. (NYSE:VSH) revealed four new 1200V FRED Pt hyperfast rectifiers in its Gen 7 platform on September 24. The devices come in two variations that are qualified to AEC-Q101 automotive standards: the 1A and 2A units in the SlimSMA HV (DO-221AC) package.
Some of the target applications include LED circuits, energy generation and storage systems, industrial drives and tools, and electric vehicle on-board chargers and engines. In power supplies, the rectifiers safeguard IGBTs and high-voltage MOSFETs by acting as clamps, snubbers, and freewheeling diodes.
According to the company report, production numbers and samples are available with an eight-week lead time.
Vishay Intertechnology, Inc. (NYSE:VSH) produces a diverse range of discrete semiconductors and passive electronics for the automotive, industrial, data processing, consumer, telecommunications, military, aerospace, and medical applications.
6. Tower Semiconductor Ltd. (NASDAQ:TSEM)
Forward P/E Ratio as of September 29: 25.09
Number of Hedge Fund Holders: 28
Tower Semiconductor Ltd. (NASDAQ:TSEM) ranks among the best cheap semiconductor stocks to buy. On September 18, Barclays began coverage of Tower Semiconductor Ltd. (NASDAQ:TSEM) with a price target of $74 and an Equalweight rating. Barclays emphasized Tower’s exposure to high-growth Silicon Photonics and Silicon Germanium technologies, which are among the company’s fastest-growing divisions.
Along with Tower’s history of successful collaborations with companies like Intel to share facility capacity, the firm highlighted Tower’s diverse end markets and geographic distribution throughout Israel, Japan, the US, and Italy.
Additionally, Barclays cited Tower’s robust balance sheet, which has $1 billion in net cash on hand, and its ambitious roadmap, which calls for a $2.7 billion revenue run-rate with an operating margin of at least 21% when its $1.2 billion capital expenditure program is complete.
Tower Semiconductor Ltd. (NASDAQ:TSEM) is an independent semiconductor foundry based in Israel. It focuses on specialty process technologies to manufacture analog intensive mixed-signal semiconductor devices.
5. Power Integrations Inc. (NASDAQ:POWI)
Forward P/E Ratio as of September 29: 23.60
Number of Hedge Fund Holders: 28
Power Integrations Inc. (NASDAQ:POWI) ranks among the best cheap semiconductor stocks to buy. Benchmark maintained its Buy rating and $55 price target for Power Integrations Inc. (NASDAQ:POWI) on September 23, following the disclosure of a key management departure. According to the company’s reports, Chief Financial Officer Sandeep Nayyar will leave his role on October 4 to take over as CFO at Altera.
As a result, Eric Verity, senior director of finance, will serve as interim CFO while Power Integrations Inc. (NASDAQ:POWI) searches for a permanent replacement.
Benchmark expressed confidence that the transition will go smoothly, citing Verity’s extended tenure and close connection with Nayyar, which should prevent any disruptions to operations or short-term changes to corporate direction.
Power Integrations Inc. (NASDAQ:POWI) is a semiconductor manufacturer that produces high-voltage integrated circuits for energy-efficient power conversion.
4. STMicroelectronics N.V. (NYSE:STM)
Forward P/E Ratio as of September 29: 19.16
Number of Hedge Fund Holders: 30
STMicroelectronics N.V. (NYSE:STM) ranks among the best cheap semiconductor stocks to buy. On September 17, STMicroelectronics N.V. (NYSE:STM) announced a $60 million investment in its Tours, France, plant, where it aims to create an experimental line for advanced semiconductor manufacturing technology. As part of a significant restructuring planned in October, the company has been transferring aging chipmaking lines away from Tours.
Known as Panel-Level Packaging (PLP), the new technology enables STMicroelectronics N.V. (NYSE:STM) to produce chips on a large square panel rather than tiny circular silicon wafers. The company currently produces more than five million chips a day at its plant in Muar, Malaysia, using the technology for one customer.
STMicroelectronics N.V. (NYSE:STM) manufactures a diverse range of analog, digital, and mixed-signal integrated circuits (ICs) and discrete devices for the industrial, automotive, consumer electronics, and communication applications.
3. On Semiconductor Corporation (NASDAQ:ON)
Forward P/E Ratio as of September 29: 16.87
Number of Hedge Fund Holders: 50
On Semiconductor Corporation (NASDAQ:ON) ranks among the best cheap semiconductor stocks to buy. On September 23, On Semiconductor Corporation (NASDAQ:ON) announced that it had agreed on a deal to acquire the rights to Vcore power technologies and its related intellectual property licensing from Aura Semiconductor. Onsemi’s power management portfolio is set to be improved by the acquisition, especially for AI data center applications.
According to the company, the acquisition will become profitable after the first fiscal year after completion and will have little effect on its GAAP and non-GAAP earnings per share before that.
On Semiconductor Corporation (NASDAQ:ON) specifically aims to improve its position in the solid-state transformer, power supply unit, and core power delivery markets. The integration will allow it to provide AI infrastructure solutions with enhanced power density, productivity, and thermal performance.
On Semiconductor Corporation (NASDAQ:ON) is a designer, producer, and supplier of semiconductor products and solutions. The company’s operations are separated into three segments: Power Solutions Group (PSG), Analog and Mixed-Signal Group (AMG), and Intelligent Sensing Group.
2. QUALCOMM Incorporated (NASDAQ:QCOM)
Forward P/E Ratio as of September 29: 13.57
Number of Hedge Fund Holders: 76
QUALCOMM Incorporated (NASDAQ:QCOM) ranks among the best cheap semiconductor stocks to buy. QUALCOMM Incorporated (NASDAQ:QCOM) reported on September 18 that it opted for Adobe GenStudio to employ generative AI to improve its content development procedures. The setup comprises GenStudio for Performance Marketing, Adobe Express, Firefly, Experience Manager, and Workfront.
Using GenStudio for Performance Marketing, QUALCOMM Incorporated (NASDAQ:QCOM) intends to produce, resize, and translate content for various marketing platforms while sticking to brand standards. Meanwhile, teams will be able to use Adobe Express as a self-service tool to design and modify assets, especially for regional and social media campaigns.
Additionally, QUALCOMM Incorporated (NASDAQ:QCOM) plans to use Adobe Experience Manager’s “Generate Variations” feature for digital channels to test various content experiences. The new apps build on QUALCOMM’s current Adobe commitment, which includes Marketo Engage for marketing automation and Adobe Workfront for workflow management.
QUALCOMM Incorporated (NASDAQ:QCOM) is a well-known American manufacturer of semiconductors and telecom equipment. The company supplies chips to major companies in a number of high-growth industries, including smartphones and autonomous vehicles.
1. Micron Technology, Inc. (NASDAQ:MU)
Forward P/E Ratio as of September 29: 9.58
Number of Hedge Fund Holders: 94
Micron Technology, Inc. (NASDAQ:MU) ranks among the best cheap semiconductor stocks to buy. While maintaining its Outperform Micron Technology, Inc. (NASDAQ:MU), Wedbush raised its price target for the company’s shares from $165 to $200 on September 18. Wedbush utilized a 10x multiple to determine the higher target by estimating the chipmaker’s earnings per share for the fiscal year 2027.
The firm stated that although this multiple is at the higher end of its range for the value of memory vendors during peak cycles, its gross margin projections for both DRAM and NAND memory products are still far lower than the cyclical high of 2018.
Wedbush also emphasized the potential benefits of High Bandwidth Memory (HBM) devices, indicating that beyond its current forecasts, there may still be more upside.
Micron Technology, Inc. (NASDAQ:MU) is a leading manufacturer of solid-state drives (SSDs), flash memory, and dynamic random-access memory (DRAM), among other memory and data storage products.
While we acknowledge the potential of MU 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 MU and that has 100x upside potential, check out our report about this cheapest AI stock.
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