Three semiconductor stocks ready to rise after a recent slide, following revelations China’s DeepSeek may have developed cutting-edge capabilities cheaply, likely are familiar names.
Investors interested in tapping into advances in artificial intelligence (AI) might find that now may turn out to be a good time to purchase shares in some of the strongest semiconductor companies available. The potential returns could be huge.
Semiconductor companies comprise $144 billion of the $406 billion in data center system spending, according to Gartner. That semiconductor data center spending is expected to rise to $179 billion by calendar year 2028, based on a projected 12.5% compound annual growth rate (CAGR), the research firm wrote.
Three Semiconductor Stocks Ready to Rise: Gilder’s Guidance
Indeed, the global semiconductor industry pulled in $335 billion in revenue in 2015, according to the Gilder Technology Report. In 2025, it will more than double to nearly $690 billion, the Gilder Technology Report added.
Paul Dykewicz poses with George Gilder, of Gilder’s Technology Report and Gilder’s Moonshots.
Today’s semiconductor and data center giants create massive barriers for newcomers, according to the Gilder’s Moonshots advisory service. The immense cost and complexity of building advanced fabs and data centers lock out smaller players, leaving the industry reliant on an increasingly narrow set of dominant firms, the report continued.
“Just as Taiwan Semiconductor (NYSE: TSM) liberated ultimately thousands of chip designers from needing to own a fab to bring their chips to market, DeepSeek’s success disrupts this narrative,” according to Gilder’s Moonshots. “With better algorithms, innovative software and thoughtful system design, startups can challenge the status quo without needing to outspend their competitors on fabrication and infrastructure.”
Gilder’s Moonshots seeks to identify and recommend companies that have the potential to soar. The portfolios followed by Gilder’s Moonshots are named Lift Off, Escape Velocity, Orbit, Course Correction, Deep Space and Test Flight.
If DeepSeek’s methods gain widespread adoption, they could drastically reduce the demand for ultra-high-end graphics processing units (GPUs), Gilder’s Moonshots reported. This could pose a serious threat to the business model of semiconductor industry leader NVIDIA (NASDAQ: NVDA), which has thrived on selling high-margin GPUs essential for AI training,” added the analysts at Gilder’s Moonshots.
Three Semiconductor Stocks Ready to Rise: NVDA
The potential shift toward more cost-effective hardware, such as RISC-V chips or commercial GPUs, could force NVIDIA to rethink its strategy, Gilder opined. While this might seem like a setback for NVIDIA, it could also serve as a catalyst for the company to innovate and explore new horizons, he counseled.
“Nvidia introduced the GPU—the beating heart of practical artificial intelligence and accelerated computing—to the world and remains the world leader in the technology, Gilder opined. “It is almost impossible to overestimate the importance of this breakthrough or the enhancements Nvidia has made over the years.”
Santa Clara, California-based NVIDIA Corporation is a semiconductor stock that BofA rates as an unquestioned buy. BofA set a $190 price objective on Nvidia, based on a 33x 2026 estimated price/earnings (P/E) multiple, excluding cash. The multiple is within NVDA’s historical 21x-67x forward year P/E range, which BofA wrote is justified due to its stronger growth opportunities ahead as gaming cycle troughs and data center demand potentially faces strong, long-term demand challenges, BofA wrote.
Nvidia a recommendation in Gilder’s Technology Report, but also in the High Velocity Options advisory service of Jim Woods and the Hi-Tech Trader service of Bryan Perry.
Risks to Nvidia achieving BofA’s lofty projections include possible weakness in consumer-driven gaming market, competition with major public companies, internal cloud projects and private companies in AI and accelerated computing markets. Further risk exists from larger-than-expected impact of restrictions on compute shipments to China, or additional restrictions placed on activity in the region.
Other uncertainty could come from lumpy and unpredictable sales in new enterprise, data center and autos markets, as well as potential for decelerating capital returns and enhanced government scrutiny of NVDA’s dominant market position in AI chips, BofA wrote.
Chart courtesy of www.StockCharts.com.
Three Semiconductor Stocks Ready to Rise: ASML
ASML Holding N.V. (NASDAQ: ASML), of Veldhoven, the Netherlands, is a supplier of semiconductor raw materials to chipmakers around the world, particularly in China. Among ASML’s more than 42,000 employees or contractors in more than 60 locations worldwide, the majority of them are based at the company’s headquarters.
The headquarters of the company is important because it will be less affected by President Trump’s new 10% tariff on Chinese imports. Investors in ASML thereby will be able to dodge direct fallout from a possible trade war between the United States and China.
ASML has been reporting a surge in new orders after a lackluster 2024 when its share price slumped about 25% from its highs. However, orders in its last quarter jumped 169% from the previous one, and demand for its computer chips is only going to go up in the next five years, wrote Mark Skousen, who heads the TNT Trader advisory service.
So, we are seeing an opportunity to buy on the “rumor” to later sell on the “news,” Skousen wrote in his latest TNT Trader report. ASML has its earnings report coming up just two months away in April.
Mark Skousen leads the TNT Trader and Five Star Trader advisory services.
“We think that this positive news is going to drive the price up heading into this earnings report,” Skousen wrote. “And the earnings estimates are trending in the right direction, with a huge increase from $4.75 to $5.73 per share in just the last week.”
Chart courtesy of www.StockCharts.com.
Three Semiconductor Stocks Ready to Rise: COHR
Coherent Corp. (NYSE: COHR), a Saxonburg, Pennsylvania-based manufacturer of optical materials and semiconductors, is another BofA recommendation. The stock received a $120 price objective based on 26x 2026 estimated P/E, above the high end of its historical 5x-25x range. But BofA called it justified due to potential sales upside from hyperscaler upgrades and solid margin expansion opportunities under a new management team.
Outperformance could be attained by better than expected datacom/AI and telco capex trends, cyclical recovery in industrial and auto markets and faster implementation of cost cutting and restructuring measures, BofA wrote in a recent research note. Risks remain too, though.
Those risks include lumpy and cyclical telecom/hyperscaler capital expenditure trends and sentiment around AI exposure and high volatility. Other key risks feature high debt balance, which could limit operating leverage, and high competition in optical transceivers potentially leading to a price war.
Chart courtesy of www.StockCharts.com.
Three Semiconductor Stocks Ready to Rise: Summary
Three semiconductor stocks ready to rise after a recent slide seem able to withstand revelations that China’s DeepSeek may have developed cutting-edge capabilities cheaply. In a world of destabilizing warfare in the wake of Russia’s continuing invasion of Ukraine and other conflicts around the globe, semiconductor stock should show staying power.
Paul Dykewicz is the editor of StockInvestor.com and the editorial director of Eagle Financial Publications in Washington, D.C. He writes and edits for the website, as well as edits investment newsletters, time-sensitive trading alerts and other reports published by Eagle. He also is an accomplished, award-winning journalist who has written for Dow Jones, USA Today and other publications, as well as served as business editor of a daily newspaper in Baltimore. In addition, Paul is the author of the inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain.” He received his MBA in finance from Johns Hopkins University, where he was a two-time president of the school’s Finance Club. In addition, Paul has a bachelor’s degree from the University of Michigan and a master’s degree in journalism from Michigan State University. Outside of work, Paul volunteers with a faith-based organization to assist the poor in Southeast Washington, D.C., to learn personal finance skills to lift themselves out of debt.
