The semiconductor sector is experiencing a swift expansion as semiconductors are becoming the fundamental components of contemporary technology. Progress and breakthroughs in this industry are expected to directly influence all subsequent technologies.

Given the industry’s tailwinds, investors could consider buying fundamentally sound semiconductor stocks, Applied Materials, Inc. (AMAT - Get Rating), ASML Holding N.V. (ASML - Get Rating), and Photronics, Inc. (PLAB - Get Rating), which are chasing the chip boom.

The increasing demand for discrete devices, power semiconductors, and high-power modules for various end users is expected to drive the semiconductor manufacturing equipment market growth. Therefore, the global semiconductor manufacturing equipment market is projected to grow at a CAGR of 10.6% by 2032.

Additionally, the United States has decreased its imports of semiconductors from China by 10% due to geopolitical factors, such as trade relations between the two countries. This move has prompted an expansion in domestic production supported by the U.S. CHIPS Act, which is giving out $52 billion to help boost the American semiconductor industry.

Considering these encouraging trends, let’s take a look at the fundamentals of the three best Semiconductor & Wireless Chip stocks, starting with #3.

Stock #3: Applied Materials, Inc. (AMAT - Get Rating)

AMAT engages in the provision of manufacturing equipment, services, and software to the semiconductor, display, and related industries. The company operates through three segments: Semiconductor Systems; Applied Global Services; and Display. 

AMAT’s trailing-12-month EBIT and levered FCF margins of 29.22% and 13.28% are 438.2% and 11.4% higher than the respective industry averages of 5.43% and 11.93%.

AMAT’s revenue for the first quarter that ended January 31, 2025, was reported at $7.17 billion. Its non-GAAP net income came in at $1.95 billion, up 9% from the year-ago quarter. The company reported adjusted EPS of $2.38, up 12% from the prior-year quarter.

Analysts expect AMAT’s revenue for the fiscal first quarter ending April 2025 to increase 7.3% year-over-year to $7.13 billion. For the same quarter, Street expects its EPS to increase 10.5% year-over-year to $2.31. The company surpassed its revenue and EPS estimates in each of the trailing four quarters, which is promising.

AMAT’s stock has soared 4% year-to-date to close the last trading session at $169.20.

AMAT’s POWR Ratings reflect its outlook. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

The stock has a B grade for Quality. It is ranked #21 in the 90-stock Semiconductor & Wireless Chip industry.

Beyond what is stated above, we’ve also rated AMAT for Value, Momentum, Growth, Stability, and Sentiment. Get all AMAT ratings here.

Stock #2: ASML Holding N.V. (ASML - Get Rating)

Headquartered in the Netherlands, ASML develops, produces, markets, sells, and services advanced semiconductor equipment systems for chipmakers. It offers advanced semiconductor equipment systems, including lithography, metrology, and inspection systems.

ASML’s trailing-12-month asset turnover ratio of 0.64x is 7.5% higher than the industry average of 0.59x. its trailing-12-month gross profit margin of 51.28% is 1.2% higher than the industry average of 50.65%.

During the third quarter that ended December 31, 2024, ASML’s total net sales came in at €7.47 billion ($7.83 billion), and its gross profit was reported at €3.79 billion ($3.98 billion). The company’s net income came in at €2.08 billion ($2.18 billion) and €5.28 per share.

Street expects ASML’s revenue and EPS for the first quarter (ending March 2025) to increase 42.3% and 79.4% year-over-year to $8.03 billion and $5.95, respectively. Moreover, the company topped the consensus EPS estimates in all four trailing quarters, which is impressive.

ASML’s stock has increased 8.5% over the past three months to close the last trading session at $751.55.

ASML’s POWR Ratings reflect prospects. ASML has a B grade for Quality and Sentiment. It is ranked #18 in the same industry.

In addition to the POWR Ratings highlighted above, one can access ASML’s ratings for Momentum, Stability, Value, and Growth here.

Stock #1: Photronics, Inc. (PLAB - Get Rating)

PLAB engages in the manufacture and sale of photomask products and services in the United States, Taiwan, China, Korea, Europe, and internationally. The company offers photomasks that are used in the manufacture of integrated circuits and Flat Panel Displays (FPDs) and to transfer circuit patterns onto semiconductor wafers and FDP substrates.

PLAB’s trailing-12-month EBIT margin of 25.55% is 370.6% higher than the industry average of 5.43%. Its trailing-12-month EBITDA margin of 35.10% is 232.3% higher than the industry average of 10.56%.

During the fourth quarter that ended October 31, 2024, PLAB’s revenue was reported at $222.63 million, and its gross profit at 82.30 million. Furthermore, the company’s non-GAAP net income and earnings per share came in at $37.05 million and $0.59, respectively.

Street expects PLAB’s revenue and EPS for the second quarter (ending April 2025) to increase 3.7% and 13% year-over-year to $225 million and $0.52, respectively.

PLAB’s stock has plunged 1.7% over the past six months to close the last trading session at $22.27.

PLAB’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. 

PLAB has a B grade for Value, Quality, and Sentiment. It is ranked #3 out of 90 stocks in the same industry.

Click here to access the additional PLAB ratings (Momentum, Stability, and Growth).

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ASML shares were trading at $751.55 per share on Monday afternoon, down $25.44 (-3.27%). Year-to-date, ASML has gained 8.63%, versus a 4.03% rise in the benchmark S&P 500 index during the same period.

About the Author: Nidhi Agarwal

Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More...

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