Semiconductor stocks are absolutely on fire right now. Investors are drawn to the promise of the chip sector, especially as it provides the raw computing power necessary to power the artificial intelligence revolution.
The industry’s benchmark fund, the VanEck Semiconductor ETF (NYSEARCA:SMH), has soared over 75 percent over the past 12 months. And individual AI-related chip companies have posted even larger gains.
This might make it seem like it’s too late to find bargains in the industry. And yet, the chip industry is broad. There are dozens of publicly-traded companies that take part and not all of them have seen an AI-driven boost, at least not yet. These are three semiconductor stocks to buy now that are, amazingly enough, near their 52-week lows — at least for the time being.
Astera Labs (ALAB)
Founded in 2017, Astera Labs (NASDAQ:ALAB) has already made a big splash.
The company IPOed earlier this year and has achieved a market capitalization of around $8 billion, which is an impressive sum for such a young company.
Astera designs, manufactures, and sells semiconductor-based connectivity solutions for cloud and AI infrastructure.
Specifically, it focuses on its Intelligent Connectivity Platform which gives clients a broad range of data, network and memory products which deliver cloud and AI solutions at scale.
While ALAB stock technically IPOed for $36 per share, it closed its first trading day at $62 each. The stock would quickly go on to hit a peak of $95 as investors warmed up to its AI potential.
Since then, however, skeptics have emerged with a focus around the company’s valuation.
That’s valid, with the stock currently going for more than 100 times forward earnings.
However, the company’s revenues are expected to soar from $304 million in 2024 to $611 million in 2026 while reaching $1 billion in 2028. That’s simply amazing top-line revenue growth, and the fact that the company is already profitable is nice as well.
ALAB stock has now sunk to around $55/share putting it near its lowest point since its IPO launched. That could make it a compelling dip-buying opportunity for growth-focused investors.
Atomera (ATOM)
Atomera (NASDAQ:ATOM) is a small semiconductor firm. Its name comes from the idea that it aims to deliver technology at the atomic level.
Specifically, it developed a patented, quantum engineered material called Mears Silicon Technology which enhances transistors. Atomera believes its MST technology can improve battery life, shrink device footprints and improve web server performance.
The company has been in business for many years, and it may be reaching an inflection point. Last year, it announced a pivotal commercial licensing deal with industry heavyweight STMicroelectronics (NYSE:STM).
This is a high-risk pick, to be sure, given Atomera’s historical lack of meaningful commercial revenues. But in this market, it’s hard to find technology companies at 52-week lows.
Unlike many firms with a slumping stock price right now, Atomera has reasons for optimism. The massive short interest, currently at 17% of the float, could easily lead to a squeeze. And the STMicroelectronics licensing deal could be a precursor to more sustained commercial success.
Aehr Test Systems (AEHR)
Aehr Test Systems (NASDAQ:AEHR) isn’t quite at its 52-week lows anymore, as the stock has ripped higher over the past week.
Still, down from a 52-week high of $54, shares are deep in the discount bin with the stock currently around $16.
Aehr Test Systems offers test solutions for testing, burning-in and semiconductor devices in wafer level, singulated die, and package part form and installed systems worldwide.
Because Aehr Test Systems is focused more on test systems for chips that go into consumer electronics, it has missed out on the recent AI boom.
In fact, as sales of mobile phones, tablets and other such units has fallen, the company has seen weakness in demand for its chip testing systems. It is also involved in chips for autos, where business has also slumped with the recent downturn in electric vehicles.
But, the bottom appears to be near. Analysts are projecting a roughly 20% decline in earnings for its fiscal year 2024. However, Aehr Test Systems just delivered a better-than-expected earnings report and it dramatically raised guidance for its fiscal year fourth quarter as well.
AEHR stock is still down 60% over the past 12 months. That’s a grossly excessive decline given that the earnings trend has turned, and the company should return to double-digit growth in 2025.
On the date of publication, Ian Bezek 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) and positions in the securities mentioned in this article.
