Semiconductors are the core infrastructure powering the Information Age. The amount of data we ingest is also increasing exponentially, leading to elevated demand for chips with more processing power. This secular trend bodes well for the industry, which has posted a six-month gain of 53.6% and beaten the S&P 500 by 39.7 percentage points.
Nevertheless, a cautious approach is imperative because Moore’s Law (a principle stating that computer productivity doubles every two years) will eventually make even the most impactful technologies today obsolete. Taking that into account, here is one semiconductor stock poised to generate sustainable market-beating returns and two best left ignored.
Two Semiconductor Stocks to Sell:
Qorvo (QRVO)
Market Cap: $8.66 billion
Formed by the merger of TriQuint and RF Micro Devices, Qorvo (NASDAQ: QRVO) is a designer and manufacturer of RF chips used in almost all smartphones globally, along with a variety of chips used in networking equipment and infrastructure.
Why Do We Steer Clear of QRVO?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 4.6% annually over the last two years
- Sales are projected to tank by 1.5% over the next 12 months as its demand continues evaporating
- Earnings per share decreased by more than its revenue over the last five years, showing each sale was less profitable
At $97.62 per share, Qorvo trades at 12.8x forward P/E. Read our free research report to see why you should think twice about including QRVO in your portfolio.
Allegro MicroSystems (ALGM)
Market Cap: $8.27 billion
The result of a spinoff from Sanken in Japan, Allegro MicroSystems (NASDAQ: ALGM) is a designer of power management chips and distance sensors used in electric vehicles and data centers.
Why Are We Wary of ALGM?
- Sales were flat over the last two years, indicating it’s failed to expand this cycle
- Operating margin of 2% has deteriorated over the last five years, hampering its adaptability and competitive positioning
- Weak free cash flow margin of 8.1% has deteriorated further over the last five years as its investments increased
Allegro MicroSystems is trading at $44.68 per share, or 39.2x forward P/E. Check out our free in-depth research report to learn more about why ALGM doesn’t pass our bar.
One Semiconductor Stock to Watch:
Marvell Technology (MRVL)
Market Cap: $194.4 billion
Moving away from a low margin storage device management chips in one of the biggest semiconductor business model pivots of the past decade, Marvell Technology (NASDAQ: MRVL) is a fabless designer of special purpose data processing and networking chips used by data centers, communications carriers, enterprises, and autos.
Why Could MRVL Be a Winner?
- Impressive 22.9% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Operating margin improvement of 19.8 percentage points over the last five years demonstrates its ability to scale efficiently
- Earnings per share grew by 23.8% annually over the last five years, comfortably beating the peer group average
Marvell Technology’s stock price of $221.52 implies a valuation ratio of 48.9x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.
