We recently compiled a list of the 10 Best Semiconductor Penny Stocks To Invest In Right Now. In this article, we are going to take a look at where indie Semiconductor, Inc. (NASDAQ:INDI) stands against the other semiconductor penny stocks.
One of the biggest news items from last month was that Trump wanted to kill the CHIPS Act. Why was it a huge scandal that the president threatened to “alter federal government contracts with chipmakers and slap new tariffs on the semiconductor industry”? The answer lies in analyzing the semiconductor space and appreciating just how much of an essential industry chipmaking has become.
Semiconductors, or chips, are the backbone of modern electronic devices. The materials and the accompanying technologies have become central to many industries, especially artificial intelligence (AI). They are especially critical in the current age of AI because they provide the necessary processing power for AI computations. As such, advances in semiconductor technology are the edge countries need to take the lead in the AI sector and other industries that rely on chips.
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That is why the Biden administration enacted the CHIPS and Science Act (CHIPS Act) on August 9, 2022. The primary objective of the Act is to boost domestic research and manufacturing of semiconductors. Put simply, the United States wants to onshore some of the chipmaking activity that has since been outsourced to places like Taiwan. Some of the goodies in the Act include subsidies, investment tax credits for chip manufacturing equipment, and $52.7 billion in funding for chipmakers that choose to set up shop in the US.
And the US is not alone. Just recently, Vietnam launched a national semiconductor strategy with a $500 million investment. The first major objective is to establish the country’s first semiconductor fabrication plant. Across several borders on Vietnam’s west is India working on advancing its semiconductor industry. Recently, the Indo-American Chamber of Commerce (IACC) and the US Consulate revealed plans to create a whitepaper that addresses “the needs of India’s domestic sector and incorporate perspectives from US stakeholders.” Many other countries are either working on a similar strategy or are already making investments in local chipmaking capacity.
Such government interest is one reason the semiconductor industry has gone crazy over the past few months. In 2024 alone, chipmakers reported $627 billion in revenues, much more than Deloitte had forecasted. With the growing interest in the industry by governments worldwide, one cannot disagree with Deloitte’s assessment that the sales momentum will carry on this year. In fact, Deloitte projects that semiconductor sales will hit $697 billion in 2025, and that the industry is on pace to record $1 trillion in sales by 2030.
The stock market’s performance confirms that investors are noting the optimism in the global semiconductor industry. The market cap of the top 10 global chip companies currently sits at $6.23 trillion. Although this is a few billions less than the market cap in December 2024 ($6.5 trillion), it is still many multiples higher than in 2023 and back.
But there is a problem. If Trump makes good on his promise to throw the spanner into the CHIPS Act’s works, the chaos that may ensue in the global semiconductor market may be catastrophic. What Vietnam or India do to boost their local sectors doesn’t matter because the US has insane leverage in this industry. And the biggest losers will be the industry giants. In fact, out of the top 10 global chip companies, only the shares of two have been in the green for the past 30 days. The other eight have lost substantial value.
This is where the case for semiconductor penny stocks makes sense. Some penny stocks can make gains of over 4,000% in a volatile environment, although they also carry significant risks. But volatility isn’t always a bad thing. According to Michael Saylor, “Volatility is a gift to the faithful. It scares away the tourist, it scares away the lazy, it scares away the people who are already conventionally rich and have all the money.”
In other words, if there was a time to tilt your portfolio to the semiconductor penny stock side, then that time is now. The primary reason is that any disturbance in the global chips supply chain will hit major players harder. Many smaller players are agile enough to navigate difficult situations better, and there is nothing investors love more than a stock that conserves value in a choppy market.
Our Methodology
To compile our list of the 10 Best Semiconductor Penny Stocks To Invest In Right Now, we used stock screeners to identify stocks trading under $5 (as of March 5). We focused on companies operating in two industries: Semiconductors and Semiconductor Equipment & Materials. From the resultant data, we ranked these companies based on institutional interest, as measured by the number of hedge funds holding positions in each stock at the end of Q4 2024.
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).
A semiconductor chip with intricate circuitry, highlighting the company’s tech capabilities.
indie Semiconductor, Inc. (NASDAQ:INDI)
Price as of March 5: $2.87
Number of Hedge Fund Holders In Q4 2024: 22
indie Semiconductor, Inc. (NASDAQ:INDI) makes computer chips—and the supporting software—that power advanced driver assistance systems (ADAS), in-cabin user experience, and vehicle electrification applications. The company creates mixed-signal SoCs embedded in edge sensors that are used in Radar, LiDAR, Ultrasound, and Computer Vision applications.
indie Semiconductor, Inc. (NASDAQ:INDI) recently made public its Q4 2024 financial results, which gives mixed signals. Revenue came in at $58.0 million, 7.5% higher than the previous quarter. However, the non-GAAP gross margin remained flat at 50.4%, and the operating loss (on a GAAP basis) was higher at $33.9 million compared to $21.6 million a year ago. The non-GAAP operating loss was $14.2 million, versus $2.4 million during the same period in the previous financial year.
But a look at the company’s business highlights provides a clue to the increased operational costs. indie secured two new design wins with OEMs in South Korea and China—front sensing and interior monitoring for the Korean OEM and multi-channel applications such as eMirror for the Chinese OEMs. The company also validated the performance of initial samples of its 120 GHz radar solution for in-cabin occupant monitoring. It also achieved ASIL-D certification (the highest level of functional safety) for its electrification ASIC.
To meet the increased demand, the company has added in-house photonics integration, packaging, and system test capabilities. This way, indie can offer customers complete photonics subsystems for rapid solution evaluation and production. The strategy strengthens the company’s position in the automotive sector, where the market for optical components alone is expected to reach $9.80 billion this year. This explains why the company tops our list of 10 best semiconductor penny stocks to invest in right now.
Overall INDI ranks 1st on our list of the best semiconductor penny stocks to invest in right now. While we acknowledge the potential of INDI as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than INDI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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