Three Semiconductor Stocks That May Be Poised for Market Shifts
This week, we use AAII’s A+ Investor Stock Grades to provide insight into three semiconductor stocks. With artificial intelligence (AI) projected to contribute $15.7 trillion to the global economy by 2030, should you consider the three stocks of Cirrus Logic Inc. (CRUS), Himax Technologies Inc. (HIMX) and Taiwan Semiconductor Manufacturing Co. Ltd. (TSM)?
Semiconductor Stocks Recent News
The semiconductor industry is projected to grow in 2025, driven by AI adoption and increased demand for high-performance chips. According to PwC’s Global Artificial Intelligence Study, AI is expected to contribute $15.7 trillion to the global economy by 2030, boosting China’s gross domestic product (GDP) by 26.0% and North America’s by 14.5%. Together, these two regions could account for nearly 70%, or approximately $10.7 trillion, of AI’s total economic impact. As AI adoption expands across industries such as health care, finance and automotive, the demand for AI-capable semiconductors is increasing.
Industry confidence has also risen alongside AI-driven demand. KPMG’s Semiconductor Industry Confidence Index increased from 54 in 2024 to 59 for 2025, reflecting higher expectations for revenue growth, profitability and capital investment. AI has now surpassed automotive as the top application driving semiconductor revenue, marking a shift in industry priorities. Additionally, 84% of semiconductor executives expect workforce expansion or stability, indicating that companies anticipate continued chip production growth to meet AI’s increasing requirements.
As AI applications expand, demand for microprocessors, graphics processing units (GPUs) and AI-specific chips is increasing. Companies such as Cirrus Logic, Himax Technologies and Taiwan Semiconductor may present attractive opportunities for investors looking to benefit from the industry’s long-term expansion.
Grading Semiconductor Stocks With AAII’s A+ Stock Grades
When analyzing a company, it is helpful to have an objective framework that allows you to compare companies in the same way. This is why AAII created the A+ Stock Grades. They evaluate companies across five factors that research and real-world investment results indicate to identify market-beating stocks in the long run: value, growth, momentum, earnings estimate revisions (and surprises) and quality.
Using AAII’s A+ Stock Grades, the following table summarizes the attractiveness of three semiconductor stocks — Cirrus Logic, Himax Technologies and Taiwan Semiconductor — based on their fundamentals.
AAII’s A+ Stock Grade Summary for Three Semiconductor Stocks
What the A+ Stock Grades Reveal
Cirrus Logic Inc. (CRUS) is a semiconductor company that designs and sells low-power, high-precision mixed-signal processing solutions for global markets. The company specializes in audio products. Its SoundClear portfolio includes tools, software and algorithms designed to enhance sound quality, voice capture and hearing augmentation for a range of devices and systems. Cirrus Logic also provides high-performance mixed-signal products, such as camera controllers, haptic and sensing solutions, and battery and power integrated circuits (ICs). These products are used in smartphones, industrial applications and energy systems. The company distributes its products through a direct sales force, external sales representatives and distributors. Cirrus Logic was incorporated in 1984 and is headquartered in Austin, Texas.
Cirrus Logic has a Value Grade of C, based on its Value Score of 57, which is average. Higher scores indicate a more attractive stock for value investors and, thus, a better grade. The Value Grade is the percentile rank of the average of the percentile ranks of the price-to-sales (P/S) ratio, price-earnings (P/E) ratio, price-to-book-value (P/B) ratio, price-to-free-cash-flow (P/FCF) ratio, shareholder yield and the ratio of enterprise value to earnings before interest, taxes, depreciation and amortization (EBITDA).
The company has a shareholder yield of 2.3%, ranking in the 29th percentile among all U.S.-listed stocks. Its price-to-free-cash-flow ratio is 9.9 and its price-earnings ratio is 17.2, ranking in the 23rd and 44th percentiles, respectively. The enterprise-value-to-EBITDA ratio is 9.7, ranking in the 37th percentile.
Cirrus Logic has a Momentum Grade of B, based on its Momentum Score of 62. This means that the stock’s momentum is strong in terms of its weighted relative price strength over the last four quarters. The weighted four-quarter relative strength rank is the relative price change for each of the past four quarters, with the most recent quarterly price change given a weight of 40% and each of the three previous quarters given a weight of 20%. The quarterly ranks are 33, 35, 93 and 79, sequentially from the most recent quarter, with higher ranks signaling stronger price momentum. The weighted four-quarter relative price strength is 0.1%.
Cirrus Logic has a Growth Grade of A, which is very strong. The components of the Growth Composite Score consider a company’s success in growing sales on a year-over-year and long-term annualized basis and its ability to consistently generate positive cash from its core operations. The company has a five-year annualized sales growth rate of 8.6% and has generated positive annual cash from operations in the past five consecutive years.
Himax Technologies Inc. (HIMX) is a semiconductor company specializing in display imaging processing technologies in China, Taiwan, the Philippines, Korea, Japan, Europe and the U.S. It develops display driver ICs and timing controllers used in a range of devices and industrial screens. Himax Technologies also provides automotive IC solutions. Additionally, the company offers application-specific IC services, liquid crystal on silicon (LCoS) and microelectromechanical system (MEMS) products, power ICs, complementary metal-oxidize semiconductor (CMOS) image sensors, wafer-level optics, 3D sensing solutions, and WiseEye ultralow-power smart image sensing products. Himax Technologies supplies its display drivers to panel manufacturers, mobile device module makers and end-product manufacturers. Himax Technologies was incorporated in 2001 and is headquartered in Tainan City, Taiwan.
Himax Technologies has a Quality Grade of A, based on a score of 87, which is very strong. Higher-quality stocks possess traits associated with upside potential and reduced downside risk. The Quality Grade is the percentile rank of the average of the percentile ranks of return on assets (ROA), return on invested capital (ROIC), gross profit to assets, buyback yield, change in total liabilities to assets, accruals to assets, Z double prime bankruptcy risk (Z) score and F-Score. To be assigned a Quality Score, stocks must have a valid (non-null) measure and corresponding ranking for at least four of the eight quality measures.
Himax Technologies ranks strongly in terms of its buyback yield and F-Score. It has a buyback yield of 49.9% and an F-Score of 7. The F-Score is a number between 0 and 9 that assesses the strength of a company’s financial position. It considers the profitability, leverage, liquidity and operating efficiency of a company.
The one weak component in the stock’s Quality Grade is its return on invested capital of 10.3%, which ranks in the lowest 40th percentile of all stocks.
Himax Technologies has a Value Grade of C, based on a score of 58, which is average. The company ranks in the cheapest 33rd percentile for its price-to-book ratio and in the cheapest 43rd percentile for its price-to-sales ratio. The company has a price-to-book ratio of 1.04 and a price-to-sales ratio of 1.50. It also has a price-to-free-cash-flow ratio of 24.5, ranking in the 55th percentile.
The company has a Momentum Grade of A, based on its Momentum Score of 94. This means that the stock’s momentum is very strong in terms of its weighted relative price strength over the last four quarters. The quarterly ranks are 96, 34, 85 and 29, sequentially from the most recent quarter. The weighted four-quarter relative price strength is 25.6%.
Taiwan Semiconductor Manufacturing Co. Ltd. (TSM) and its subsidiaries manufacture, package, test and sell ICs and semiconductor devices in Taiwan, China, Europe, the Middle East, Africa, Japan, the U.S. and other international markets. The company provides a wide range of wafer fabrication processes, including CMOS logic, mixed-signal, radio frequency, embedded memory and bipolar CMOS mixed-signal technologies. In addition to manufacturing, Taiwan Semiconductor offers customer and engineering support services, mask production, and investment in technology start-ups. The company also researches, designs, develops, manufactures, packages and tests color filters and provides investment services. Its semiconductor products are used in high-performance computing, smartphones, the Internet of Things (IoT), automotive applications and digital consumer electronics. The company was incorporated in 1987 and is headquartered in Hsinchu City, Taiwan.
Taiwan Semiconductor has a Quality Grade of A, based on a score of 98, which is very strong. The company ranks strongly in terms of its return on assets and buyback yield. Its return on assets of 18.6% ranks in the 96th percentile among all U.S.-listed stocks, and its buyback yield of 6.5% ranks in the 94th percentile. Taiwan Semiconductor also has an F-Score of 8, ranking in the 94th percentile.
The company’s Growth Grade is B, which is strong. Taiwan Semiconductor has realized positive annual cash from operations in the past five consecutive years. It also has a five-year annualized sales growth rate of 19.8%.
Earnings estimate revisions indicate whether analysts’ expectations for the firm’s profits have improved or worsened. Taiwan Semiconductor has an Earnings Estimate Revisions Grade of B, based on a score of 67, which is positive. The grade is based on the statistical significance of its latest two quarterly earnings surprises and the increases in its consensus earnings estimate for the current fiscal year over the past month and past three months.
Taiwan Semiconductor reported fourth-quarter 2024 earnings of $2.24 per share, compared to the consensus estimate of $2.225 per share. In the third quarter, it reported a positive earnings surprise of 8.4%. Over the last month, the consensus earnings estimate for full-year 2025 has risen from $8.971 to $9.015 per share, based on five upward revisions and one downward revision.
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The stocks meeting the criteria of the approach do not represent a “recommended” or “buy” list. It is important to perform due diligence.
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