For Immediate Release
Chicago, IL – February 10, 2026 – Today, Zacks Equity Research discusses Broadcom AVGO, Lam Research LRCX and Amkor Technology AMKR.
Industry: Semiconductors
Link: https://www.zacks.com/commentary/2842165/3-stocks-to-buy-from-the-prospering-semiconductor-industry
The Zacks Electronics - Semiconductors industry players are benefiting from the growing proliferation of AI, Generative AI (Gen AI), IoT, Machine Learning (ML) and industrial revolution 4.0 (which focuses on interconnectivity and automation). These have turned out to be boons for industry players like Broadcom, Lam Research and Amkor Technology. Increasing demand for AI-supportive chips from hyperscalers is a major growth driver.
Accelerating AI-related spending by hyperscalers bodes well for these stocks. The growing demand for high-volume consumer electronic devices, including digital media players, smartphones, tablets, efficient packaging, machine vision solutions and robotics, should continue to drive the industry’s growth. However, the industry is suffering from macroeconomic challenges and growing geopolitical tensions. Tariffs on trade partners, including China, are expected to hurt the industry’s prospects.
Industry Description
The Zacks Electronics – Semiconductors industry comprises companies that provide a wide range of semiconductor technologies. Their offerings include packaging and test services, wafer cleaning, factory automation, face detection and image-recognition capabilities to develop smart and connected products. The industry participants primarily cater to end markets that include consumer electronics, communications, computing, industrial and automotive.
The companies are increasing their spending on research and development to stay afloat in an era of technological advancements and changing industry standards. The industry is experiencing solid demand for advanced electronic equipment, which is helping its participants increase their investments in cost-effective process technologies.
What's Shaping the Future of the Electronics - Semiconductors Industry?
AI Demand Driving Prospects: Industry participants are benefiting from growing demand for advanced manufacturing processes and energy-efficient computing power, both of which are needed to develop AI-supportive chips. AI is gaining popularity thanks to multimodal learning and growing context awareness. The emergence of Gen AI and Agentic AI has further enhanced AI’s capabilities, making it a key driver of efficiency, automation and innovation.
Significant improvements in computing hardware (GPUs and TPUs) are allowing the development of more complex AI models. The growing number of high-speed data centers worldwide, which require ultra-fast Internet that 5G promises to deliver, is a tailwind. Increased connectivity and use of technology in consumer electronics through IoT, AI, robotics, AR/VR and others further set the momentum for 5G.
Smart Devices Aiding Computing Demand: Smart devices need computing and learning capabilities to perform functions like face detection, image recognition and video analytics capabilities. These require high levels of processing power, speed and memory and low power consumption, as well as better graphics processors and solutions, which bode well for the industry. Graphic solutions help increase the speed of rendering images and improve image resolution and color definition.
Prospects Around Advanced Packaging Robust: The increasing demand for miniaturization, greater functionality, lower power consumption, and improved thermal and electrical performance are driving the demand for semiconductor packaging and test technologies. The growing requirement for advanced packaging is gaining traction in the semiconductor industry, which is a key catalyst for industry participants.
Complex Process Drives Demand: The requirement for faster, more powerful and energy-efficient semiconductors is expected to increase rapidly with the robust adoption of cloud computing, IoT and AI. Semiconductor manufacturers are primarily looking to maximize manufacturing yields at lower costs, making semiconductor manufacturing processes more complex and driving the demand for solutions offered by industry participants. The rapid adoption of IoT-supported factory automation solutions is another contributing factor.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Electronics - Semiconductors industry is housed within the broader Zacks Computer and Technology sector. It currently carries a Zacks Industry Rank #59, which places it in the top 24% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bullish near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of the positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are optimistic about this group’s earnings growth potential. Since Aug. 31, 2025, the industry’s earnings estimates for the current year have moved up 13.8%.
Given the bullish prospects, there are a number of stocks that investors can consider for their portfolio. However, before we present the stocks, let us look at the industry’s recent stock-market performance and valuation picture.
Industry Outperforms S&P 500 & Sector
The Zacks Electronics - Semiconductors industry has outperformed the Zacks S&P 500 composite and the broader Zacks Computer and Technology sector in the past year.
The industry has appreciated 34.7% over this period compared with the Zacks Computer and Technology sector’s return of 21.9% and the S&P 500’s rise of 16.7%.
Industry's Current Valuation
On the basis of the forward 12-month price-to-earnings ratio, which is a commonly used multiple for valuing electronics semiconductor stocks, the industry is currently trading at 32.05X versus the S&P 500 and the sector’s 22.98X and 25.93X, respectively.
Over the past five years, the industry has traded as high as 39.81X and as low as 11.13X, with the median being 21X.
3 Electronics Semiconductor Stocks to Buy
Broadcom: This Zacks Rank #1 (Strong Buy) stock is experiencing strong momentum fueled by growth in AI semiconductors and continued success with its VMware integration. You can see the complete list of today’s Zacks #1 Rank stocks here.
Strong demand for its networking products and custom AI accelerators (XPUs) has been noteworthy. AVGO’s AI segment benefits from custom accelerators and advanced networking technology that supports large-scale AI deployments with improved performance and efficiency.
Broadcom expects first-quarter fiscal 2026 AI revenues to double to $8.2 billion. The company has appreciated 41.6% in a year. The Zacks Consensus Estimate for AVGO’s fiscal 2026 earnings has increased 1.3% to $10.22 per share over the past 30 days.
Lam Research: This Zacks Rank #1 company is benefiting from its strength across 3D DRAM and advanced packaging technologies. Growing etch and deposition intensity owing to increasing technology inflections in 3D architectures is a key catalyst. A rebound in the System business due to improving memory spending is an upside.
Strategic investments in research and development activities position Lam Research well to capitalize on the growing wafer fab equipment (WFE) spending. Foundry/logic, DRAM and NAND investments are expected to be higher year over year. Solid demand related to high-bandwidth memory is an upside.
Lam Research stock has appreciated 175.9% in the trailing 12-month period. The Zacks Consensus Estimate for LRCX’s fiscal 2026 earnings has increased 8.5% over the past 30 days to $5.22 per share.
Amkor Technology: Another Zacks Rank #1 stock, the company is benefiting from strong demand for advanced packaging. Expansion of AI into edge devices is expected to drive further demand for advanced packaging which bodes well for Amkor Technology.
Amkor has appreciated 102.6% in the trailing 12-month period. The Zacks Consensus Estimate for Amkor’s 2026 earnings has increased 7 cents to $1.59 per share over the past 30 days.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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