Semiconductors are the core infrastructure powering the Information Age. Compute-intensive AI workloads are also priming them for the next wave of secular growth, so it’s no wonder the industry has outperformed the market over the past six months, delivering returns of 39% compared to 10.5% for the S&P 500.

Although these businesses have produced results lately, investors should tread carefully as not all companies are equipped for the next technological innovation. Keeping that in mind, here are two semiconductor stocks boasting durable advantages and one best left ignored.

One Semiconductor Stock to Sell:

Himax (HIMX)

Market Cap: $1.44 billion

Taiwan-based Himax Technologies (NASDAQ: HIMX) is a leading manufacturer of display driver chips and timing controllers used in TVs, laptops, and mobile phones.

Why Do We Think HIMX Will Underperform?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 6% annually over the last two years
2. Sales are expected to decline once again over the next 12 months as it continues working through a challenging demand environment
3. Efficiency has decreased over the last five years as its operating margin fell by 22.9 percentage points

Himax’s stock price of $8.30 implies a valuation ratio of 55.2x forward P/E. To fully understand why you should be careful with HIMX, check out our full research report (it’s free).

Two Semiconductor Stocks to Watch:

AMD (AMD)

Market Cap: $333.2 billion

Founded in 1969 by a group of former Fairchild semiconductor executives led by Jerry Sanders, Advanced Micro Devices (NASDAQ: AMD) is one of the leading designers of computer processors and graphics chips used in PCs and data centers.

Why Are We Bullish on AMD?

1. Market share has increased this cycle as its 29.9% annual revenue growth over the last five years was exceptional
2. Exciting sales outlook for the upcoming 12 months calls for 27.1% growth, an acceleration from its two-year trend
3. Earnings growth has trumped its peers over the last five years as its EPS has compounded at 27.9% annually

At $204.43 per share, AMD trades at 37.7x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.

Photronics (PLAB)

Market Cap: $1.88 billion

Sporting a global footprint of facilities, Photronics (NASDAQ: PLAB) is a manufacturer of photomasks, templates used to transfer patterns onto semiconductor wafers.

Why Does PLAB Stand Out?

1. Operating margin improvement of 10.8 percentage points over the last five years demonstrates its ability to scale efficiently
2. Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
3. Stellar returns on capital showcase management’s ability to surface highly profitable business ventures, and its rising returns show it’s making even more lucrative bets

Photronics is trading at $31.82 per share, or 16.6x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.

Stocks We Like Even More

Check out the high-quality names we’ve flagged in our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.