NVIDIA NASDAQ: NVDA stock is heading higher in 2025 because of the persistent and unmet demand for its cutting-edge data center and AI technology. Analysts forecast another 42% upside at the high end of their range, and the actual stock price top may well be higher. However, the industrial semiconductor market is set up to rebound after years of disruption, normalization, and growth in 2025, and the analysts’ estimates are low.
The critical takeaway is that semiconductor end-market inventory normalization is completed or near-completed globally, and tailwinds are forming. The FOMC is lowering interest rates, and policy changes expected in 2025 will stimulate the United States’ economic activity and systemic demand for industrial semiconductor technology. These are the stocks to watch.
Analog Devices: Cautiously Optimistic for Strong Growth
Analog Devices Today
Analog Devices
(As of 12/3/2024 06:07 PM ET)
- 52-Week Range
- $179.63
▼
$244.14
- Dividend Yield
- 1.66%
- P/E Ratio
- 67.34
- Price Target
- $249.33
Analog Devices NASDAQ: ADI business contracted in 2024, but the trends are positive and point to growth in 2025. The critical details include a narrowing contraction, better-than-expected performance, and steady margins to sustain cash flow and balance sheet health.
The outlook for 2025 forecasts the continuation of the trends and a pivot back to growth before the year’s end. The company’s CEO reports improving sequential demand in all end markets, and the CFO is cautiously optimism for strong growth in 2025.
The guidance for Q1 is favorable, coming in with a mid-point above the consensus. Outperformance is expected throughout the year because of the low bar set by analysts. 5G and the IoT will be among the growth drivers in 2025. The IoT is expected to begin booming by mid-year as 5G network expansion and AI functionality reach a critical mass.
Semtech Reverts to Growth in 2024: Strength Reported in All End Markets
Semtech Today
(As of 12/3/2024 06:07 PM ET)
- 52-Week Range
- $16.19
▼
$67.00
- Price Target
- $67.70
Semtech NASDAQ: SMTC is among the leading names in the industrial semiconductor market, reverting to growth in 2024. Its FQ3 results include nearly 18% topline growth and solid profitability compounded by better-than-expected guidance forecasting another strong quarter with year-over-year growth accelerating to nearly 30%.
The outlook for 2025 is also robust, expecting revenue growth to sustain at a high double-digit rate, and MarketBeat’s reported consensus is likely a low-ball estimate.
The company reported strength in all end markets with a shout-out for the data center segment, up 58% sequentially on demand that is not expected to wane in 2025.
Microchip Technology Nears Inflection Point
Microchip Technology Today
Microchip Technology
(As of 12/3/2024 06:07 PM ET)
- 52-Week Range
- $62.63
▼
$100.57
- Dividend Yield
- 2.78%
- P/E Ratio
- 45.73
- Price Target
- $90.95
Microchip Technology NASDAQ: MCHP is still deep in its inventory correction and restructuring its manufacturing lines to accommodate. It will shut down an excess line in early 2025 and begin to reap cost-saving benefits by the end of the year.
The remaining facilities have enough capacity to fill the gap once end-market demand is normalized, which is expected by mid-year calendar 2025, aligning with the end of the fiscal year.
The forecast for the back half of the year, the first half of fiscal 2026, is robust, with nearly 20% top-line growth expected.
GlobalFoundries Inc: Outperforming and Tracking for Growth in 2025
GlobalFoundries Today
GlobalFoundries
(As of 12/3/2024 06:07 PM ET)
- 52-Week Range
- $35.85
▼
$62.61
- P/E Ratio
- 33.31
- Price Target
- $50.21
GlobalFoundries’ NASDAQ: GFS FQ3 results align with the trends, including a narrowing contraction, outperformance, and positive guidance. The company reports strength across its portfolio business, driven by new design wins.
The outlook for Q4 is for revenue to be nearly flat compared to last year and to revert to growth in FQ1 2025.
The consensus for 2025 is for accelerating sequential growth and roughly 10% for the year, a low estimate given the outlook for IoT, cloud connectivity, and industrial demand growth.
Onsemi: Leading the Charge With Hi-Power SiC Semiconductors
Onsemi: Leading the Charge With Hi-Power SiC Semiconductors
Onsemi Today
(As of 12/3/2024 ET)
- 52-Week Range
- $59.34
▼
$86.77
- P/E Ratio
- 17.32
- Price Target
- $85.87
Onsemi NASDAQ: ON is well-positioned as a manufacturer of SiC-based semiconductors. Because of their durability and performance at high temperatures, SiC semiconductors are well-suited to a wide range of industrial applications, including EVs and solar technology.
The business hit the bottom of its contraction in FQ3 2024, contracting by nearly 20% but outperforming expectations, and management is guiding for sequential improvement. Sequential strength was reported in three of the four operating segments, with the fourth and the full business expected to revert to growth in F2025.
The forecast for next year is for revenue growth to accelerate sequentially throughout the year, with full-year results in the high-single-digit range.
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