While there’s nothing unusual about discussing semiconductor stocks with high return potential, specifying a 10X target within a defined timeframe (in this case, in a decade) runs the risk of the “analysis” aging like milk. Not even the coldest refrigerator can keep the underlying beverage fresh and viable for that long. Still, that’s the challenge at hand. To be sure, I can’t call with absolute authority and conviction semiconductor stocks that could turn $1,000 into $10,000. However, if there ever was a sector to make such a bold prediction, the computer chip space would be it.
Fundamentally, digitalization initiatives – whether we’re talking about the cloud, the Internet of Things, or artificial intelligence – have taken over every facet of our lives. However, all these brilliant innovations require semiconductors. Thus, investing in semiconductor stocks makes plenty of sense. Not surprisingly, McKinsey & Company pointed out that the global chipmaking industry could become a trillion-dollar ecosystem by 2030. So, could these top semiconductor stocks deliver a ten-bagger? I don’t know. Still, if you want a swing at the bat, these ideas may be quite compelling.
Semiconductor Stocks with High Return Potential: AXT Inc (AXTI)
Headquartered in Fremont, California, AXT Inc (NASDAQ:AXTI) focuses on high-performance semiconductor wafer substrates for major electronic and optoelectronic applications. It also features a line of industry-critical raw materials. Essentially, AXTI represents a candidate for semiconductor stocks with high return potential because of its “background” prowess; that is, AXT isn’t a household name but it keeps the broader tech industry cooking.
Unfortunately, the bears have been cooking up some trouble for AXTI. In full disclosure, shares carry significant risks. Therefore, if you’re investing in semiconductor stocks but can’t handle the heat, you should probably stick with the blue chips.
Nevertheless, AXTI intrigues because of underlying analyst support. Wall Street’s experts peg shares as a consensus strong buy. Overall, their average price target lands at $4.57, implying over 38% upside potential. Most recently, Needham’s Charles Shi sees a $5 price target, implying almost 52% growth. Presently, AXT carries a three-year EBITDA growth rate of 66.4%, outpacing 88.64% of its peers. Thus, it’s an outside contender for semiconductor stocks that could turn $1,000 into $10,000.
Semiconductor Stocks with High Return Potential: Silicon Motion (SIMO)
An American-Taiwanese enterprise, Silicon Motion (NASDAQ:SIMO) focuses on developing NAND flash controller integrated circuits for solid-state storage devices. According to Mordor Intelligence, the NAND flash memory market reached a valuation of $66.52 billion in 2021. By 2027, experts project that the sector will hit a value of $94.24 billion. That’s a compound annual growth rate (CAGR) of 5.33%.
Should Silicon Motion continue to dominate the sector, it could easily be one of the semiconductor stocks with high return potential. For reference, the company presently carries a market capitalization of $1.85 billion. Thus, it has room to grow. Still, prospective speculators should realize it’s a volatile opportunity. Since the beginning of this year, SIMO dropped nearly 14%.
Enticingly, analysts peg SIMO as a consensus strong buy. On average, their price target comes out to $88, implying 59% upside potential. Also worth pointing out is that Wedbush’s Matt Bryson anticipates shares hitting $104, implying 88% growth. Per Gurufocus, Silicon Motion’s three-year EBITDA growth rate is 42.1%, ranked better than 75% of its peers. Thus, it’s one of the top semiconductor stocks for speculation.
Semiconductor Stocks with High Return Potential: Pixelworks (PXLW)
Founded in 1997, the San Jose, California-based Pixelworks (NASDAQ:PXLW) provides video and pixel processing semiconductors and software. In addition, the enterprise offers digital displays, projection devices, and digital signage solutions, per its public profile. Fundamentally, PXLW ranks among the semiconductor stocks with high return potential because of its myriad relevancies.
Unfortunately, the pessimists refuse to give Pixelworks a chance. Since the January opener, PXLW slipped nearly 8%. And in the past 365 days, it’s down almost 16%. Prospective investors should be aware that over the last 60 months, PXLW failed to gain traction, shedding 59%. Nevertheless, within the last three months, one analyst stuck his neck out: Craig-Hallum’s Richard Shannon, who pegged PXLW as a buy. More significantly, the expert anticipates shares reaching $3, implying over 76% upside potential. That’s the 12-month forecast.
To be sure, Pixelworks is so far aspirational because of its negative operational stats. However, PXLW trades at 1.46 times trailing-year sales, which is undervalued relative to the sector median stat of 2.65 times.
Headquartered in Camarillo, California, Semtech (NASDAQ:SMTC) is a supplier of analog and mixed-signal semiconductors and advanced algorithms for consumer, enterprise computing, communications, and industrial end markets. Naturally, Semtech command multiple points of relevance, including IoT, satellite communications, and long-range networking initiatives. Thus, from a fundamental perspective, SMTC makes a compelling case for semiconductor stocks with high return potential.
Unfortunately, as with the other ideas for semiconductor stocks for future returns, the market does not see things optimistically. Since the January opener, SMTC slipped more than 28%. Worryingly, in the past 365 days, shares hemorrhaged slightly over 65% of equity value. I’m not casting aspersions but you do need to be careful here.
Still, covering analysts peg SMTC as a consensus strong buy. Overall, their price target averages out to $40.14, implying over 93% upside potential. Most recently, Stifel Nicolaus’ Tore Svanberg pegged SMTC as a buy, with the expert projecting a $32 price target. However, the most ambitious target is $62, implying over 198% upside. In closing, Semtech represents an aspirational idea given its ho-hum 11.3% three-year EBITDA growth rate. Still, the analysts love it so there’s that.
SkyWater Technology (SKYT)
Hailing from Bloomington, Minnesota, SkyWater Technology (NASDAQ:SKYT) is a semiconductor engineering and fabrication foundry. According to its public profile, SkyWater represents the only U.S.-owned pure-play silicon foundry. With the Biden administration focusing intently on rejuvenating the domestic tech industry, relevance combined with some patriotism could lift SKYT. Thus, it’s one of the semiconductor stocks with high return potential.
To be sure, the market responded enthusiastically to SkyWater given the obvious positive implications. Since the Jan. opener, SKYT popped up nearly 31%. And in the trailing one-year period, shares gained 78% of equity value. For those investing in semiconductor stocks that find comfort in the masses, SKYT certainly is intriguing.
Within the past three months, SKYT carries a unanimous strong buy assessment (among three analysts). The experts’ average price target stands at $21.50, implying nearly 122% upside potential. Notably, about two months ago, Needham’s Rajvindra Gill issued a price target of $25, implying almost 158% growth. To be fair, SkyWater is an aspirational idea because of its less-than-satisfactory financials. However, its three-year book growth rate pings at 24.5%, above 74.28% of the competition.
ACM Research (ACMR)
Founded in 1998 in California, ACM Research (NASDAQ:ACMR) is the tech industry’s most advanced front-end wafer cleaning technologies. As well, its website claims gentler, damage-free cleaning, thereby leading to defect reduction and yield raising for its enterprise-level clients. Again, because of its background relevance in quietly serving the broader tech space, ACMR ranks among the semiconductor stocks with high return potential.
At the same time, the market has had trouble convincing itself to jump aboard the opportunity with gusto. Since the beginning of this year, ACMR slipped almost 4%. More pressingly, over the past 365 days, shares lost more than 30% of equity value.
Despite the obvious concerns, analysts peg ACMR as a unanimous strong buy (among four experts). Moreover, their average price target clocks in at $22.13, implying nearly 140% upside potential. Most conspicuously, Benchmark’s Mark Miller issued a price target of $32 for ACM. That implies a whopping 246.7% growth from the time of writing. Plus, ACM’s three-year EBITDA growth rate comes out to 47.2%, outflanking 79.11% of the competition. Thus, it’s one of the top semiconductor stocks for future returns.
Headquartered in San Jose, California, Peraso (NASDAQ:PRSO) is only appropriate for those investing in semiconductor stocks that could turn $1,000 into $10,000 and with the potential to do so very quickly. What I’m getting at is that in exchange for the extreme upside potential, you must accept the possibility of utter devastation to your portfolio. Please don’t say I didn’t warn you.
According to its website, Peraso bills itself as a world leader in the development of 5G mmWave silicon. It also claims to be one of the few chipmakers shipping mmWave devices in high volume. While intriguing, the problem with Peraso comes down to the show-me-the-money effect. Since the Jan. opener, PRSO fell more than 45%. In the trailing year, it’s down more than 76%.
However, the plot twist comes courtesy of Benchmark’s David Williams, who pegged PRSO a buy. Not only that, the expert has a price target of $1.50, implying over 270% upside potential. Whether that’s realistic or not is difficult to say. Per Gurufocus, Peraso’s three-year revenue growth rate stands at 205.3%. However, its EBITDA growth rate during the same period is 21.5% below zero.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.