The semiconductor industry has made a solid rebound over the past few months, triggered by robust sales as the enthusiasm surrounding artificial intelligence (AI) continues to propel more investment in the area by industry giants.
Robust demand from a range of industries has significantly boosted chipmakers' revenues over the past year, after a sluggish 2023. As a result, the semiconductor industry has been a key driver of overall market gains, playing a key role in last year and this year’s overall tech rally.
Given this scenario, it would be ideal to invest in semiconductor stocks, such as RF Industries, Ltd. RFIL, Monolithic Power Systems, Inc. MPWR and Microchip Technology MCHP.Each of these stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Semiconductor Sales Continue to Soar
Global semiconductor sales totaled $179.7 billion in the second quarter of 2025, jumping a solid 7.8% from the previous quarter, the Semiconductor Industry Association (SIA) said on Monday.
Year over year, semiconductor sales totaled $59.9 billion in June, up 19.6% from last year’s total of $50.1 billion, and 1.5% sequentially.
John Neuffer, SIA president and CEO, said, “Global chip sales remained strong in Q2 of this year, outpacing sales from Q1 by 8% and topping Q2 sales from last year by nearly 20%. Year-to-year market growth was driven by increased sales in the Asia Pacific and Americas markets, and annual global growth is projected for the second half of the year.”
AI Optimism Powering Semiconductor Sales
Earlier this year, semiconductor sales saw an unexpected decline, sparked by concerns over the competitiveness of U.S. tech companies following the debut of China’s budget-friendly AI platform, DeepSeek. However, industry analysts dismissed those fears, labeling DeepSeek as overhyped and not a major threat to American tech firms.
The strong performance in the first and second quarters follows a stellar 2024, during which global semiconductor revenues reached $627.6 billion — a 19.1% increase from $526.8 billion in 2023.
The first quarter of 2025 alone brought in a solid $167.7 billion in revenues, marking an 18.8% rise compared to the same period last year.
A large portion of this growth was driven by high demand for data center chips and memory products. With continued investment in AI technologies, analysts anticipate the semiconductor industry will maintain its double-digit growth well into 2025.
3 Semiconductor Stocks With Upside
RF Industries, Ltd.
RF Industries, Ltd. is engaged in the design, manufacture and distribution of coaxial connectors used in radio communications applications as well as in computers, test instruments, PC LANS and antenna devices.
RF Industries’ expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 4.3% over the past 90 days. RFIL presently sports a Zacks Rank #1.
Monolithic Power Systems
Monolithic Power Systems, Inc. designs, develops and markets high-performance power solutions. MPWR focuses on the market for high-performance analog and mixed-signal integrated circuits. Monolithic Power Systems’ products are widely utilized in industrial applications, telecommunication infrastructures, cloud computing, automotive and consumer applications.
Monolithic Power Systems’ expected earnings growth rate for the current year is 21%. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the past 90 days. MPWR has a Zacks Rank #2.
Microchip Technology
Microchip Technology has been consistently benefiting from its strength in the analog and microcontroller businesses. MCHP’s dominance in 8, 16, and 32-bit PIC microcontrollers remains a major driver of top-line and bookings growth. Microchip Technology has acquired notable companies like Tekron International, Microsemi and Atmel to add strength to its product offerings.
Microchip Technology’s expected earnings growth rate for the current year is 5.3%. The Zacks Consensus Estimate for current-year earnings has improved 23.2% over the past 90 days. MCHP currently has a Zacks Rank #2.
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Microchip Technology Incorporated (MCHP): Free Stock Analysis Report Monolithic Power Systems, Inc. (MPWR): Free Stock Analysis Report RF Industries, Ltd. (RFIL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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