This article was originally published on Forbes on May 28, 2022,11:54pm EDTForbes on May 28, 2022,11:54pm EDT
Semiconductor stocks have gained prominence due to growth drivers such as artificial intelligence, high-performance computing, 5G, robotics, machine learning, and electric vehicles. Despite supply constraints and the challenging macro environment, semiconductor stocks have withstood the tech sell-off better than other sectors. This is due to many semiconductor companies being profitable with strong free cash flows.
We reviewed the stocks in the sector to find out which companies stand out in terms of revenue growth, profits, cash flows, and earnings surprise.
Top 20 semiconductor stocks with highest growth rates for the current fiscal year.
Source: YCharts
In the above chart, Indie Semiconductor leads with the expected growth of 130% year-over-year in the current fiscal year. The company is riding the growth trend in advanced-driver assistance systems (ADAS) and electric vehicles. It has a Serviceable Addressable Market (SAM) of $40 billion by 2026. The company supplies chips and software to the automobile sector. It’s chips power sensor capabilities like LiDAR and Radar, and vehicle electrification.
The company’s revenues accelerated by 171% YoY to $22 million in the recent quarter. The management expects revenue to grow 178% at the mid-point in the next quarter. While the company is not profitable at the moment. The management expects it to be profitable in the second half of next year.
AMD is expected to grow 60% this year due to the Xilinx acquisition. The company had initially guided for organic growth of 31% during Q4 results. The Xilinx acquisition was completed in February this year, and partly by better demand from end markets. In the recent quarter, the company’s revenue grew by 71% YoY to $5.9 billion, with organic revenue growth of 55%. Even if we exclude Xilinx, the company is a leading growth stock among the semis due to data center growth and gaming.
Top 20 semiconductor stocks with highest growth rates for the next fiscal year.
Source: YCharts
Navitas Semiconductor has the highest growth rate in the above chart. The company is a leading player in the Gallium Nitride (GaN) chips. The benefits of GaN include fast charging and better power efficiency. Currently used in mobile phones & laptops, EVs are the future opportunity. Ambarella is another interesting company to watch. The company’s chips which were previously popular for using in drones and cameras have recently found a niche in the automobile sector. The company’s AI computer vision chips benefit from the Internet of Things, ADAS, and autonomous driving. The company’s revenue in the 4Q FY2022 grew by 45% YoY to $62.1 million. The computer vision revenue accounted for more than 25% of the FY2022 revenue and is expected to be 45% of FY2023 revenues.
Semiconductors with Top Forward P/S Sales multiples
Source: YCharts
In the above chart, SiTime Corporation has the highest forward P/S ratio. The company is a leading provider of Silicon Timing Solutions. In the recent quarter results, the company’s revenue grew by 98% YoY to $70.3 million. The revenue is expected to grow 50% this year and 23% in the next year. The strong growth rates are reflected in the company’s share price, which has doubled in the past year.
