3 Semiconductor Stocks Set to Surpass Q4 Earnings Estimates

Semiconductor stocks witnessed healthy demand trends in the fourth quarter of 2025 with an accelerated pace of 5G deployment and increased fiber densification. Despite a challenging macroeconomic environment characterized by geopolitical conflicts and tariff wars, the industry seemed to benefit from higher demand for scalable infrastructure for seamless connectivity amid a wide proliferation of IoT devices. Monthly data on global semiconductor sales from the Semiconductor Industry Association corroborates this growth momentum. Monthly sales in October 2025 improved 4.7% sequentially to $72.7 billion, while November 2025’s metrics jumped 3.5% sequentially to $75.3 billion. 

Semiconductor chips are the building blocks of telecommunication equipment, electronic goods and IoT devices. A steady pace of 5G deployment and investments by leading carriers to increase their fiber footprint in rural areas to bridge the digital divide seemed to infuse confidence in the sector. In addition, a seamless transition from an economy-of-scale network operating model to demand-driven operations that offer easy programmability and flexible automation were tailwinds.

Factors at Play

Solid 5G Traction, Fiber Densification

5G has fast-tracked the wide proliferation of video and other bandwidth-intensive applications with a high-speed data transmission rate and zero latency. 5G is touted as the primary catalyst for next-generation IoT services, which include connected cars, augmented reality, virtual reality platforms, smart cities and connected devices that are likely to revolutionize key industry verticals.  

Expansion of fiber optic networks by carriers to support their 4G LTE and 5G wireless standards, as well as wireline connections, is acting as a tailwind. The fiber-optic cable network is vital for backhaul and the last-mile local loop, which are required by wireless service providers for 5G deployment. Fiber networks are also essential for the growing deployment of small cells that bring the network closer to the user and supplement macro networks to provide extensive coverage.

Transition to Cloud, GenAI Tools 

With operators moving toward converged or multi-use network structures, combining voice, video and data communications into a single network, the industry is increasingly developing solutions to support wireline and wireless network convergence. The industry players have enabled enterprises to rapidly scale communications functionalities to a vast range of applications and devices with easy-to-use software application programming interfaces. The wide proliferation of cloud networking solutions further results in increased storage and computing on a virtual plane. 

Electronic devices form the very fulcrum of IoT services, wireless devices and data centers. The rapid adoption of these devices is increasing demand for electronics testing equipment. Moreover, rising demand for power management applications is a key catalyst. Sturdy efforts toward the modification of the Internet infrastructure, the evolution of smart cars & autonomous-driving vehicles are bearing fruit. The emergence of AI-based applications and generative AI tools across industries is driving demand for enterprise-level data communications and information processing infrastructure products, such as routers, switches, data center interconnects, edge solutions and server and storage products, all of which are based on semiconductor chips.

Focus on Novel Technologies

Adoption of state-of-the-art technologies such as AI, ML, DOCSIS (Data Over Cable Service Interface Specification), DSL (Digital Subscriber Line) and Next Generation PON (Passive Optical Network) platforms for the highest bandwidth applications has led to higher demand for semiconductor chips. 

Further, a combination of network-based video transcoding, packaging, storage and compression technologies required to deliver new IP video formats and home gateways to connected devices inside and outside the home is increasingly driving the industry growth.

How to Pick?

A multitude of semiconductor stocks is likely to report earnings in the coming weeks. A solid earnings performance of the technology sector could sow the seeds for future investments and R&D as the industry seeks to capitalize on the inherent growth potential.

Among a diverse range of companies, choosing the right stock for your portfolio could appear to be a colossal task. While it is impossible to be sure about such outperformers, our proprietary methodology makes the process fairly simple. 

Our research shows that for stocks with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), chances of an earnings surprise are as high as 70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP is an important ingredient of our proven model, which, along with a top Zacks Rank, creates the perfect combination to determine stocks with the best chances to pull off a surprise in the upcoming earnings announcements. It is the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.

Potential Winners

Microchip Technology Incorporated MCHP: Chandler, AZ-based Microchip develops smart, connected and secure embedded control solutions. The company focuses on general-purpose and specialized 8-bit, 16-bit, and 32-bit mixed-signal microcontrollers, microprocessors, field-programmable gate arrays (FPGAs) and memory products. Microchip is one of the leading providers of 8-bit, 16-bit and 32-bit microcontrollers globally.

The company’s AI coding assistant is aiding customers to achieve up to a 40% productivity improvement in programming Microchip’s microcontroller devices. The company is adding AI agents into the AI coding assistant that is expected to reduce time to market for its customers. Microchip has secured design wins in data center infrastructure, spanning AI acceleration, storage and network infrastructure with tier 1 cloud providers and enterprise leaders. The company has expanded connectivity, storage and compute offerings for AI and data center applications, as well as intelligent power modules for AI at the edge. Microchip currently has a Zacks Rank #2 and an Earnings ESP of +1.34%. The company is scheduled to report results after the closing bell on Feb. 5.

Microchip Technology Incorporated Price and EPS Surprise

Microchip Technology Incorporated price-eps-surprise | Microchip Technology Incorporated Quote

Lattice Semiconductor Corporation LSCC: Headquartered in Hillsboro, OR, Lattice is a leader in the design and manufacturing of low-power FPGA devices. The company also develops programmable mixed-signal and interconnect products along with related software and intellectual property (IP), supporting applications ranging from edge to cloud computing.

As a leading provider of low-power programmable solutions, Lattice’s FPGA devices empower customers with a strong base of compute technologies. These solutions optimize input/output (I/O) expansion, hardware acceleration and system management while reducing power consumption and operating costs. Lattice accelerates customers’ time to market by providing IP cores, reference designs, development kits and design software in its FPGAs. Strategic investments in cutting-edge tools, such as Lattice Radiant and Lattice Propel, enhance design efficiency while integrated system-level solution stacks, including Lattice Automate, mVision, ORAN, sensAI, Sentry and Drive, address high-growth demands in industrial automation, embedded vision, AI, security and automotive markets. 

This Zacks Rank #2 firm has an Earnings ESP of +3.67%. The company is scheduled to report results after the closing bell on Feb. 10.

Lattice Semiconductor Corporation Price and EPS Surprise

Lattice Semiconductor Corporation price-eps-surprise | Lattice Semiconductor Corporation Quote

Cirrus Logic, Inc. CRUS: Headquartered in Austin, TX, Cirrus Logic is a fabless semiconductor supplier that develops low-power, high-precision mixed-signal processing solutions. The company focuses on expanding markets where it can apply its high-precision, low-power mixed-signal processing knowledge to address challenging issues across the analog-to-digital divide.

It continues to gain momentum in the laptop market with design wins on major platforms. Having gained early traction in high-end models, the company is now expanding into mainstream programs to access higher volumes and increase its share of the addressable market. In the PC space, the company is reportedly developing advanced audio processing solutions optimized for voice assistants, conferencing and immersive sound experiences — areas where AI-driven features are becoming standard. In the automotive sector, Cirrus Logic is exploring integrated solutions that combine voice control, noise management and signal processing for safer and more engaging in-cabin experiences. These additions broaden its portfolio across price points, support higher-volume programs and create new revenue opportunities by expanding its addressable market. 

Cirrus Logic has an Earnings ESP of +5.90%. The company is scheduled to report results on Feb. 3. Cirrus Logic sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cirrus Logic, Inc. Price and EPS Surprise

Cirrus Logic, Inc. price-eps-surprise | Cirrus Logic, Inc. Quote

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research