Semiconductors are the silicon backbone of the digital revolution. 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 40.6% compared to 14.4% 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. On that note, here is one semiconductor stock boasting a durable advantage and two best left ignored.
Two Semiconductor Stocks to Sell:
Intel (INTC)
Market Cap: $180.4 billion
Inventor of the x86 processor that powered decades of technological innovation in PCs, data centers, and numerous other markets, Intel (NASDAQ: INTC) is a leading manufacturer of computer processors and graphics chips.
Why Should You Sell INTC?
- Annual sales declines of 6.4% for the past five years show its products and services struggled to connect with the market during this cycle
- Performance over the past five years shows each sale was less profitable as its earnings per share dropped by 40.7% annually, worse than its revenue
- Free cash flow margin shrank by 35.3 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
Intel is trading at $37.78 per share, or 92.4x forward P/E. Read our free research report to see why you should think twice about including INTC in your portfolio.
Allegro MicroSystems (ALGM)
Market Cap: $5.02 billion
The result of a spinoff from Sanken in Japan, Allegro MicroSystems (NASDAQ: ALGM) is a designer of power management chips and distance sensors used in electric vehicles and data centers.
Why Do We Think Twice About ALGM?
- Sales tumbled by 14.2% annually over the last two years, showing market trends are working against its favor during this cycle
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 15.6% annually while its revenue grew
- Investment activity picked up over the last five years, pressuring its weak free cash flow margin of 7.8%
At $27.12 per share, Allegro MicroSystems trades at 37.7x forward P/E. Check out our free in-depth research report to learn more about why ALGM doesn’t pass our bar.
One Semiconductor Stock to Watch:
Marvell Technology (MRVL)
Market Cap: $71.6 billion
Moving away from a low margin storage device management chips in one of the biggest semiconductor business model pivots of the past decade, Marvell Technology (NASDAQ: MRVL) is a fabless designer of special purpose data processing and networking chips used by data centers, communications carriers, enterprises, and autos.
Why Are We Fans of MRVL?
- Annual revenue growth of 22% over the past five years was outstanding, reflecting market share gains this cycle
- Operating margin improvement of 24.6 percentage points over the last five years demonstrates its ability to scale efficiently
- Free cash flow margin increased by 8 percentage points over the last five years, giving the company more capital to invest or return to shareholders
Marvell Technology’s stock price of $84.24 implies a valuation ratio of 26.7x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .
Stocks We Like Even More
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 9 Market-Beating Stocks. 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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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