Arm Holdings plc (NASDAQ:ARM) is one of the 10 Best Semiconductor Stocks to Buy Right Now. On August 17, Jay Goldberg, an analyst at Seaport Global, initiated coverage on the company’s stock with a “Buy” rating and set a price objective of $150. As per the analyst, Arm Holdings plc (NASDAQ:ARM) is recognized for its significant value in the broader semiconductor industry, with a focus on expanding into new markets and enhancing its content offerings. This strategic direction is anticipated to fuel growth and increase Arm Holdings plc (NASDAQ:ARM)’s share of the industry’s value. Overall, the analyst noted the company’s potential as it embarks on the ambitious expansion.
Seaport Global Initiates Coverage on Arm Holdings (ARM) Stock
In Q1 2026, the company’s Royalty revenue rose 25% YoY to $585 million, with growth coming from all target end markets, such as data center, automotive, smartphones, and IoT. This highlights the momentum the company has been building throughout every corner of its business. Arm Holdings plc (NASDAQ:ARM) continues to increase its revenue beyond mobile via the broadening range of products, such as CPUs and systems for markets like cloud, automotive, and IoT/embedded compute.
While we acknowledge the potential of ARM as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
(Bloomberg) — ASML Holding NV’s shares plunged the most in 26 years after it booked only about half the orders analysts expected, a startling slowdown for one of the bellwethers of the semiconductor industry.
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The Dutch company, which makes the world’s most advanced chipmaking machines, lowered its guidance for 2025 and reported bookings of €2.6 billion ($2.8 billion) in the third quarter, missing an average estimate of €5.39 billion by analysts surveyed by Bloomberg.
The results caused ASML shares to plunge 16% in Amsterdam, the biggest decline since June 12, 1998. It also triggered a broad downturn in chip-related stocks, with Nvidia Corp. falling 4.5% and the benchmark Philadelphia Semiconductor Index sliding 5.3%. Makers of chip-manufacturing equipment were especially hard hit: Applied Materials Inc. and Lam Research Corp. both suffered their worst declines since 2020, and KLA Corp. had its biggest one-day drop in nearly a decade.
“It now appears the recovery is more gradual than previously expected. This is expected to continue in 2025, which is leading to customer cautiousness,” ASML Chief Executive Officer Christophe Fouquet said in the statement.
The weak results were amplified by the company mistakenly releasing its financial results a day earlier than scheduled. ASML published the release, which was expected on Wednesday, prematurely “due to a technical error,” it said in a separate statement.
The chip industry is experiencing strangely uneven times. In areas such as artificial intelligence accelerators, companies like Nvidia can’t keep up with demand. But in other sectors, including automotive and industrial, it’s in a prolonged slump with customers cutting back orders because they have too much inventory. Intel Corp. is cutting expenses in a restructuring that includes delays to planned factories in Germany and Poland, while memory chipmakers such as Samsung Electronics Co. and SK Hynix Inc. are also being careful with spending.
“While bookings are typically lumpy, we have to concede given lowered guidance that it’s looking like the delayed cyclical recovery and specific customer challenges are weighing heavily on ASML’s 2025 expectations,” said Bernstein analyst Sara Russo.
ASML lowered its guidance for 2025 total net sales to between €30 billion and €35 billion, compared to as much as €40 billion previously. Next year, the company expects a gross margin between 51% and 53%, compared to a prior range between 54% and 56%, mainly due to delayed timing for its top-end extreme ultraviolet machines, Fouquet said in the statement.
ASML didn’t give a detailed explanation of why its bookings fell so short of estimates, beyond a few delays in plant constructions. The company will hold a call with investors Wednesday.
Europe’s most valuable technology company’s shares have fallen by a third since hitting a record high in July, hurt by the prospect of more US restrictions on its business in China, as well as a broader weakness in the semiconductor sector.
“Many will debate whether this release was an accident or planned, but clearly disappointing,” Cantor Fitzgerald analyst C. J. Muse said in an emailed statement. “Weakness across Intel and Samsung is clearly leading to 2025 tracking worse than we thought,” he said.
Last month, the Netherlands published new export control rules that made ASML apply for export licenses in The Hague instead of US for some of its older machines. That came on the heels of a Bloomberg report that the Dutch government would limit some of ASML’s ability to repair and maintain its semiconductor equipment in China.
China remained ASML’s biggest market, accounting for 47% of sales in the quarter. Sales to the Asian nation jumped by nearly 20% from previous quarter to €2.79 billion.
But the demand from China may slow in the upcoming period and Washington’s ongoing chip war against Beijing continues to be a long-term overhang on ASML shares. The company could lose nearly a quarter of its sales in China next year, and 45% of its overall revenue generated in the country is at risk from further restrictions, according to UBS analyst Francois-Xavier Bouvignies.
–With assistance from Henry Ren and Subrat Patnaik.
As the trading week came to a close, investors were feeling rather downbeat about the semiconductor industry. Many stocks in the sector had been flying high on the great promise of artificial intelligence (AI) boosting their results. However, some sour notes in recent earnings reports from major “chippies” — particularly in the guidance posted by sector king Taiwan Semiconductor Manufacturing(NYSE: TSM) — led to a fairly wide sell-off on Friday.
Taiwan Semi, which fell by over 3%, had plenty of company. Storage chip specialist Micron Technology(NASDAQ: MU) closed the day nearly 5% down, and analog chipmaker Texas Instruments(NASDAQ: TXN) slid by over 2%.
Uncomfortable news from Taiwan
What happens with Taiwan Semi reverberates throughout the chip sector, as the contract manufacturer is the 800-pound gorilla of the industry these days.
On Friday, investors were still digesting the Asian company’s first-quarter earnings release published on Thursday. While revenue rose at double-digit rates and headline net income zoomed almost 9% higher — both topping the consensus analyst estimates, by the way — the company’s guidance was a touch worrying.
Management pointed out that there is weakness in the formerly powerful global smartphone market, a dynamic that threatens to weaken future growth for the industry. Yes, AI is certain to be the rising tide that lifts all boats, but upside is limited if smartphones weigh down those watercraft.
Another not-so-positive development occurred with Super Micro Computer, a semiconductor industry supplier widely expected to be a major beneficiary of the AI revolution. The company has apparently elected not to preannounce its latest quarterly earnings release, which has been something of a habit for it lately. Market players are speculating this is because the figures won’t look so hot.
Given the trailing growth posted by many chip companies and the feverish adoption of AI, more than a few analysts are expecting improvements to Supermicro’s fundamentals when it publishes those fiscal second-quarter numbers.
Smartphones — not a shocker
The world is still in the grip of AI fever, so ultimately the technology will keep the growth engine running for the better semiconductor companies helping to power it.
Also, while smartphones remain go-to items for much of the world, it’s not surprising that they’re no longer sources of hot growth. Improvements to their functionalities tend to be incremental these days, and users are hanging on to models longer before upgrading. It’s not as if that segment is in any kind of free fall, or that this is a shocking development. This is likely one reason why that drop in semiconductor stocks Friday wasn’t more drastic.
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Nvidia Corp (NASDAQ:NVDA), a leading player in the semiconductor industry, finds itself at the center of a supply crisis exacerbated by heightened demand for its RTX 4090 graphics cards.
The shortage of these cards, particularly pronounced in regions like Southeast Asia and Taiwan, underscores the challenges facing consumers and manufacturers alike.
This surge in demand comes amidst the backdrop of tightened export controls on advanced chips to China by the U.S. government, further complicating supply chain dynamics, Nikkei Asia reports
Consequently, retailers report steep price hikes of up to 60% since the chip’s launch in 2022, as buyers scramble to secure available inventory for resale in lucrative markets like China and Hong Kong.
This frenzy surrounding the RTX 4090, coupled with the sustained demand for Nvidia’s H100 chips used in AI training, exacerbates the semiconductor shortage, impacting gaming enthusiasts and industries reliant on advanced computing technology.
Last October, purchasing agents emptied shelves in a frenzy at Taiwan’s Guanghua Digital Plaza, particularly for Nvidia’s sought-after RTX 4090 graphics cards. These agents, flush with cash, aimed to exploit a lucrative price gap by reselling the cards in markets restricted by the U.S.
The RTX 4090, initially designed for rendering high-quality images in video games and capable of AI model training, found a booming market in Hong Kong and China despite the U.S. sanctions kicking in. Previous reports highlighted how U.S. sanctions led to the emergence of a captive underground market for AI chips in China.
Meanwhile, Nvidia has begun accepting pre-orders for its latest AI chip, the H20, explicitly designed for the Chinese market to directly challenge Huawei Technologies Co’s similar offerings in terms of price.
Meanwhile, industry experts echo concerns regarding the broader semiconductor industry. Foxconn Chairman Young Liu and Wistron Chairman Simon Lin caution about the uncertainties looming over consumer electronics amid geopolitical tensions and trade disputes. They emphasize the importance of adapting to geopolitical shifts and diversifying supply chains to mitigate risks.
Furthermore, Towa’s CEO, Hirokazu Okada, highlights the robust demand for artificial intelligence chips, reflecting the growing reliance on AI technology across various sectors.
Acer Chairman Jason Chen’s remarks on expanding manufacturing efforts in India align with the broader trend of tech companies seeking to capitalize on emerging markets and navigate evolving regulatory landscapes.
Price Action: NVDA shares traded lower by 0.15% at $699.92 on the last check Thursday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo via Wikimedia Commons
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Advanced Micro Devices (NASDAQ: AMD) has become one of the more notable comeback stories in recent years. Left for dead in the middle of the last decade, it has become a leader in CPU, GPU, and embedded chips under the leadership of CEO Lisa Su.
With it making advancements in the AI field, AMD stock is on an upward trajectory, rising 127% in 2023. However, determining whether the semiconductor stock can mint millionaires from here requires a closer look.
The state of AMD
AMD stock has benefited from a tremendous level of success under Su and has the potential to go much higher. When Su took over in 2014, she limited the company’s focus to CPUs and GPUs. Since product development timelines in the semiconductor industry take at least three years, Su’s vision took time to bear fruit.
Nonetheless, in that time, the company’s CPUs surpassed the performance of those of longtime rival Intel. In the GPU field, it won contracts to power Sony‘s PlayStation and Microsoft‘s Xbox. Additionally, its GPUs have helped it gain traction on Nvidia in some cases, and helped its data center technologies take market share from Intel.
Moreover, just when it looked like Nvidia would dominate AI chips, AMD released its Instinct MI300A accelerator chip and the MI300X GPU, which AMD claims is a faster chip than Nvidia’s H100.
These new offerings have stoked investor optimism, taking the semiconductor stock to 52-week highs in late December. Over the last year, AMD stock has more than doubled.
Why minting millionaires from here may be a struggle
Unfortunately, turning small investors into millionaires would take a level of growth beyond the imaginations of many. With AMD’s recovery, its market cap has reached almost $220 billion, taking it into mega-cap status.
If an investor bought $10,000 worth of AMD stock today, the market cap would have to reach nearly $22 trillion for that position to become $1 million. Currently, the stock with the highest market cap, Apple, has a market cap of around $3 trillion, less than one-seventh that amount.
Also, AMD’s financials would have to make considerable improvements to send the stock into hyperdrive. In the third quarter of 2023, its revenue of $5.8 billion grew 4% year over year, compared with a 9% yearly decline for revenue in the first three quarters of the year.
AMD’s revenue growth should improve. Still, even if it can find a way to match Nvidia’s 206% revenue growth in its third quarter of fiscal 2023 (ended Oct. 29), it will likely not make recent investors with only a few thousand to invest into millionaires .
Millionaire status is more reachable for large investors who bought the stock on Oct. 8, 2014, the day Su became AMD’s CEO. If you’d started a $10,000 position then, it would be worth approximately $414,000 today, meaning if the stock jumps another 127% in 2024, those investors’ original investment would be close to $1 million.
AMD as a millionaire maker
Although AMD can probably help an investor make money on the road to becoming a millionaire, it has probably grown too large to accomplish that feat on its own for small investors. As a mega-cap stock, it is unlikely to achieve the 100-fold or more increases needed to turn $10,000 into $1 million.
Nonetheless, AMD’s performance has far exceeded that of the indexes during Su’s time at the company. Given past successes, that trend is likely to continue. Hence, even if one cannot become a millionaire, an investor could become significantly richer with a long-term investment in AMD stock.
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Will Healy has positions in Advanced Micro Devices and Intel. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, Microsoft, and Nvidia. The Motley Fool recommends Intel and recommends the following options: long January 2023 $57.50 calls on Intel, long January 2025 $45 calls on Intel, and short February 2024 $47 calls on Intel. The Motley Fool has a disclosure policy.
(Bloomberg) — Broadcom Inc. plans to fire almost 1,300 VMware Inc. employees in California following the completion of a $61 billion acquisition that pushed the chipmaker deeper into the software industry.
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The cuts will begin Jan. 26 and affect some 1,267 positions, Broadcom said in a submission to the California Employment Development Department. The jobs are located at VMware’s Palo Alto headquarters, which will remain open.
The chipmaker is following its usual pattern of eliminating support roles to cut costs in the wake of takeovers. Chief Executive Officer Hock Tan has built one of the biggest companies in the semiconductor industry through a string of deals, which have increasingly focused on software.
Tan’s strategy, which has boosted profits and won him support from investors, is to identify companies that have strong market share but stunted growth prospects. After purchasing them, he consolidates operations — such as sales, human resources and other support organizations — to cut costs while trying to retain engineering talent.
VMware has become the centerpiece of Tan’s software operations. He previously built up the division by purchasing CA Technologies and Symantec Corp.’s corporate security business.
VMware, founded in 1998, pioneered virtualization programs, which allow software to make more efficient use of server computers. The company had about 38,300 employees prior to the closing of the transaction, according to data compiled by Bloomberg.
Broadcom, whose other operations include making chips used by companies including Apple Inc. and Alphabet Inc.’s Google, will report earnings next week.
The San Francisco Chronicle previously reported that Broadcom would cut more than 1,200 workers.
We are headed toward a future where artificial intelligence (A.I.) plays a role in everything we do, for every person on the planet. That scale is incredibly exciting–but there are daunting challenges ahead, from the huge computing demands to security and privacy concerns. To solve them, we need to understand one fact: the path to A.I. at scale runs through our everyday devices.
Over the past few decades, our laptops, phones, and other devices have been the place where transformative technologies become tools that people trust and rely on. It’s about to happen again, but with greater impact than ever before: A.I. will transform, reshape, and restructure these experiences in a profound way.
While cloud-centric A.I. is impressive and here to stay, it faces limitations around latency, security, and costs. A.I. running locally can address all three areas. It brings A.I. into the applications we already use, where we already use them, all built right into the devices that we always have available.
However, as A.I. applications grow, we need to make sure our PCs, phones, and devices are A.I.-ready. That means designing traditional computing engines–the central processing unit (CPU) and graphics processing unit (GPU)–to run complex A.I. workloads, as well as creating new, dedicated A.I. engines like neural processing units (NPUs). Our industry is only at the beginning of a multi-year feedback loop where better A.I. hardware begets better A.I. software, which begets better A.I. hardware, which…you get the idea.
This is the future of A.I. at scale–and it also offers a roadmap to what’s next. From my nearly three decades of experience in the semiconductor industry, I see three enduring truths for how these kinds of shifts play out and how we can make the most of this moment.
People’s needs come first
Meaningful innovation starts with people’s daily needs. Think about the rise of Wi-Fi in the 2000s, the explosion of videoconferencing in the 2010s, or the more recent move to hybrid work. In each case, the industry had to figure out how technology could best fit into people’s lives. Useful applications fuel adoption and further advances until the new technology becomes indispensable.
We’re already beginning this process for A.I. on the PC. Microsoft is building A.I. into collaboration experiences for the 1.4 billion people using Windows. But in the near future, A.I. will integrate into hundreds of applications, and eventually thousands of applications that we aren’t even aware of yet. This will not only enhance existing experiences–it will elevate everything we do across work, creativity, and collaboration.
Embracing challenges will bring forth solutions
We must candidly discuss challenges to drive better results. That’s the only way to find the right solutions that address customer needs up and down the stack. For A.I., two core barriers are performance and security. Consider that GPT-3 is orders of magnitude larger than GPT-2, increasing from 1.5 billion parameters to 175 billion parameters. Now imagine those kinds of compute demands multiplied across every application, often running simultaneously. Only chips built for A.I. can make sure those experiences are fast, smooth, and power-efficient.
This is one of the most impactful inflection points for the semiconductor industry in decades. We must evolve the design of our hardware and create new, integrated A.I. accelerator engines to deliver A.I. capabilities at much lower power, with the right balance of platform power and performance. At the same time, we’ll need hardware-based security to protect the data and intellectual property that will run through A.I.
Success means collaboration across the ecosystem
It takes an open ecosystem to create world-changing technology. We know that new innovations truly take off when put in the hands of manufacturers and developers. A great example is gaming. Gaming laptops with powerful CPUs and GPUs bring intensive computing, which game developers then use to create immersive visuals and engage in gameplay. It’s all part of a collaborative process to deliver on a common goal.
Secure, seamless A.I. will require solutions at every layer of the stack. We’ll need close collaboration to scale the hardware and the operating system, provide tools for developers to adopt, and enable manufacturers and partners to deliver new experiences. Only industry collaboration can move A.I. forward at scale, unleashing a feedback loop and ultimately creating a new generation of A.I.-enabled features and killer apps. The A.I. promise is real–but so are the challenges. The semiconductor industry is essential to designing and scaling solutions, just as it’s done for other seismic technology shifts in the past. To get there, we must surface and solve practical challenges, collaborate across disciplines, and work toward a shared vision for how A.I. can serve people’s needs. I’m confident our industry will rise to the challenge.
Michelle Johnston Holthaus is the executive VP and general manager of Intel’s Client Computing Group.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
