For Immediate Release
Chicago, IL – June 23, 2026 – Today, Zacks Equity Research Texas Instruments TXN, Amtech Systems ASYS.
Industry: Semiconductors
Link: https://www.zacks.com/
Companies in the Semiconductor – General industry are at the forefront of the ongoing technological revolution based on HPC, AI, electrified and automated driving, IoT and so forth. The semiconductors they produce enable the cloud to function and help analyze data into actionable insights that can be used by companies to operate more efficiently. Therefore, the long-term outlook can only be considered bright.
In the immediate future, however, there could be some challenges. While geopolitical instability and the arms race among nations may sound like positive drivers for some, actual wars disrupt supply chains, delay deliveries and drive up prices. The U.S. government’s tariffs at this juncture will only exacerbate the inflation on end-products using semiconductors and potentially disrupt trade routes, resulting in more of the same challenges. Given the growing uncertainty, we are happy that valuation appears reasonable.
Texas Instruments has always looked good because of the sticky customer relationships and long product lifecycles, and its ongoing investment cycle should generate strong growth. We also think the Amtech Systems opportunity still has legs as AI infrastructure appears to be on steroids. So our bets are on these two stocks.
WSTS data, which is also typically quoted by the Semiconductor Industry Association (SIA), shows that global semiconductor sales are now expected to grow 89.9% in 2026 to $1.5 trillion, mainly driven by very strong memory demand. Growth will slow to 26.6% the following year.
While growth in other categories cannot match the 249.5% of memory chips, logic, MCU and analog growth of 37.3%, 19.8% and 10.2% is also strong by any standards, taking total IC growth to 101.5%. Discretes, sensors and optoelectronics will grow slower, at a respective 8%, 3% and 2.7%. The Americas will see the strongest increase at 112% this year, followed by the Asia Pacific at 87.4%, Europe at 58.4% and Japan at 27.6%.
IDC expects 52.8% growth in 2026, driven overwhelmingly by AI infrastructure investment. Memory, especially DRAM (HBM), revenues of which are expected to triple this year driven by very strong pricing, is the primary driver. IDC estimates that by 2030, data center semiconductors will account for nearly half the total semiconductor market. NAND is expected to grow 138.5% this year. In non-memory, IDC says that “several end markets are dealing with margin pressure, supply allocation challenges, and macroeconomic headwinds.”
Garter expects 64% growth in 2026, the highest in two decades, as memory revenue increases 3X amid significant price inflation. DRAM and NAND prices are expected to increase 125% and 234%, respectively, a strength that is expected to persist through most of 2027 as well. Additionally, memory price inflation will “destroy” or “delay” non-AI demand into 2028.
The U.S. government’s target of reducing dependence on China, and onshoring projects with national security implications are also shaping the future of this industry.
About the Industry
The companies grouped under the Semiconductor – General category produce a broad range of semiconductor devices, both integrated and discrete, like microprocessors, graphics processors, embedded processors, chipsets, motherboards, wireless and wired connectivity products, DLPs and analog, serving multiple end markets. The industry includes companies like NVIDIA, Texas Instruments, Intel and STMicroelectronics.
Major Themes Shaping the Industry
Artificial intelligence is the single biggest driver of the industry because of the transformation it is bringing in efficiency, cost-effectiveness, automation, safety, environmental benefits and so forth. AI has become an imperative for effective competition, irrespective of the industry and a huge infrastructure is required to support this demand.
This infrastructure consumes thousands of chips. Technology companies are building their own AI where possible and buying where it makes sense. Moreover, the more the companies that use it, the more necessary it becomes.
In this backdrop, data-intensive applications, advancements in machine learning algorithms and increasing urbanization, as well as dynamics in other end markets including data center, auto, industrial automation, healthcare, financial services and other markets are major drivers. The growth this is spurring in the semiconductor industry is likely to continue for years to come.
There is significant opportunity in the automotive and industrial markets. In fact, these two end-markets are shaping up to be its strongest growth drivers after AI. The automotive opportunity is driven largely by electrification (which consumes a large number of chips in things like power management, battery management systems, power conversion systems, charging infrastructure and motor control electronics. Strong growth is also coming from automation.
Automotive computing is also increasingly becoming a thing. The industrial opportunity is mainly in factory automation, where robots, machine vision systems, production lines and real time monitoring systems are consuming a growing number of embedded processors, analog chips, connectivity chips, sensors and power semiconductors.
Current geopolitics is negative for growth. Geopolitical tensions are adding a dimension to semiconductor demand, as countries increasingly adopt the latest technology in defense, infrastructure and other critical applications. As defense spending accelerates the world over, particularly on fighter planes and unmanned aerial vehicles currently being used in military operations, demand for the most sophisticated underlying electronics will only go up.
Tachnavio estimates that semiconductors used in the military and aerospace market will grow 6% between 2025 and 2029. However, war is not conducive to trade overall because of the disruptions in trade routes, uncertainty in demand and price escalation in key commodities. There may also be export restrictions on products being sold to an enemy country. Therefore, ongoing tensions around the world could actually dampen demand, raise prices or cause other disruption in the larger computing, consumer, data center, auto and industrial markets.
China is the largest buyer of U.S. chips and remains hostile. There is also considerable concern that most of the important leading-edge chips are currently made in Taiwan, a country that China threatens to annex. Since this has national security implications, there is an ongoing drive to onshore or nearshore manufacturing. The CHIPS Act is facilitating the process.
·Notwithstanding the fact that the long-term prospects are extremely bright because the industry is on the building-block side of technology, making it crucial for the proliferation of the Internet and the ongoing broad-based digitization, there are some near-term issues. Macro concerns are still significant.
U.S. tariffs are expected to raise prices on all the consumer electronics, computing, data center, industrial and other applications of semiconductors, severely hitting consumer confidence, neutralizing the positive effects of relatively low inflation and a somewhat lower interest rate. In the auto market, ADAS, infotainment and electronic control units (ECUs) remain attractive, with safety and fuel efficiency being top concerns.
The unemployment rate has stabilized in the last three months. However, the personal savings rate is trending down because inflation remains high and debt is increasingly supporting consumption. Consumer confidence continues to fluctuate, hit by the Middle-East conflict. This hurts consumption, including of consumer goods, technology and expensive EVs. Industrial markets are cyclical and directly impacted by any macro slowdown.
Semiconductor supply chains are adjusting. Efficient semiconductor supply chains based on the just-in-time model are no longer coveted, as the cost advantages they enable are not as important as resilience in times of huge demand and unforeseen disruptions. Players continue to adjust for these external disruptions, such as COVID, wars and tariffs. This, along with other factors, such as the U.S.-imposed restraints on dealing with China has led semiconductor companies to diversify their supply chains.
Zacks Industry Rank Indicates Strong Prospects
The Zacks Semiconductor-General Industry is a stock group within the broader Zacks Computer and Technology Sector. It carries a Zacks Industry Rank of #27, which places it in the top 11% of nearly 250 Zacks-classified industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates that near-term prospects are improving. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of 2 to 1.
An industry’s positioning in the top 50% of Zacks-ranked industries is normally because the earnings outlook for the constituent companies in aggregate is relatively strong. The opposite is true for stocks in the bottom 50% of industries. In this case, the aggregate earnings estimate for 2026 is down 29.1% from the year-ago level although the aggregate earnings estimate for 2026 is up 55.6%. The 2027 estimate is up 72.3%.
Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Stock Market Performance Remains Strong
Tracking the performance of the Zacks Semiconductor – General Industry over the past year shows that the industry has traded at a premium to both the broader Zacks Computer and Technology Sector and the S&P 500 index through most of the past year and more significantly since March 2026.
The industry has gained 57% over the past year. The broader technology sector gained 48% while the S&P 500 index gained 29.1%.
Current Valuation Reasonable
On the basis of forward 12-month price-to-earnings (P/E) ratio, we see that the industry is currently trading at a 24.64X multiple, which is a discount to its median value of 28.78X over the past year. It is also trading at a discount to the broader sector’s 25.24X.
While the S&P 500 trades at 21.54X, it’s worth noting that the industry has consistently traded at a premium to the index since 2021. The industry has traded between a low of 23.05X and a high of 38.34X over the past year. All things considered, it appears that the industry’s valuation is reasonable.
2 Stocks to Consider
Macro and geopolitics notwithstanding, the industry stands to benefit from stable or declining interest rates, which typically drives more money into risky assets. Several of the technology heavyweights in this industry are the core suppliers to the AI mega cycle we are seeing now, so we remain optimistic over the long run. The only stumbling block is the valuation. We are picking Texas Instruments and Amtech Systems:
Texas Instruments, Inc.: Dallas-based Texas Instruments is an original equipment manufacturer of analog and embedded processing chips for industrial, automotive, communications, consumer, data center and other applications.
While the US is its largest market, followed by Europe, it’s worth noting that China still accounts for roughly a fifth of its revenues, which could be at increasing risk given the current geopolitics.
As the pandemic and geopolitics impacted the chip supply chain, and the government incentivized American companies to reshore manufacturing, TI changed its manufacturing strategy from one that opportunistically used external capacity to one on the path to source more than 95% of its wafers internally, with more than 80% on 300mm, by 2030. To this end, it expanded its internal manufacturing capacity in 2024, with tool installations completed and production currently ramping at two 300mm wafer fabs in Richardson, Texas and one in Lehi, Utah. Another Lehi fab and a second Sherman, Texas fab are currently in development.
The company is a beneficiary of the 25% investment tax credit related to some of its investments in U.S. semiconductor manufacturing (expected to continue on qualified investments up to 2034). It also has an agreement with the Department of Commerce to receive direct funding of up to $1.6 billion for the two large-scale 300mm wafer fabs in Sherman, TX, as well as the under-construction Lehi fab in Utah. The company agreed to spend more than $18 billion in U.S. manufacturing, particularly on 300mm wafer capacity by the end of 2029.
As may be expected, capacity expansion initially has a negative impact on margins, as capacity can only be filled over time. Until then, some underutilization charges are a given. If there are in addition any end market issues, such as supply chain glitches in the automotive market or cyclicality in the industrial market, the impact is compounded.
It is encouraging to note that TI has also gradually increased the share of direct sales to customers, which improves insight into their projects and timelines, thus driving sales, customer penetration and market share gains. Customer relationships also tend to be sticky because TI primarily supplies analog and embedded products, and analog products are higher-valued and remain designed for years.
In 2025, more than 80% of business came from direct customers. Since TI has a huge portfolio of thousands of products and builds capacity years in advance to ensure stable supplies even when there is uncertainty in the market, it is easy for the company to attract and retain customers, grow its share of content in each design and gradually capture a growing share of the fragmented automotive and industrial markets.
Industrial and automotive markets together accounted for around 66% of revenue in 2025, so the growing electronic content in these applications holds promise. However, the data center market saw the strongest growth, contributing 9%.
In the last 60 days, the Zacks Consensus Estimate for 2026 increased by $1.31 (20.6%) while the estimate for 2027 increased $1.17 (15.4%). Analysts currently expect revenue and earnings to grow a respective 17.4% and 40.6% in 2026 followed by a respective 9.9% and 14.4% in 2027.
In the past year, this Zacks Rank #1 (Strong Buy) stock gained 62.8%.
Amtech Systems, Inc.: Amtech Systems manufactures and sells capital equipment and related consumables and services for semiconductor device packaging, wafer production and device fabrication. Products are sold to semiconductor device packaging, electronic assembly and device fabrication companies worldwide and used to fabricate and package semiconductor devices, such as graphic processing units (GPUs) used in AI applications, silicon carbide (SiC) and silicon power devices and other optical, analog and digital devices.
The optimism on Amtech shares is coming from its SiC equipment.SiC offers several advantages over silicon, including the ability to handle higher voltages, operate at higher temperatures, and switch faster and with lower energy loss. Because of these advantages, engineers can design smaller, lighter and more efficient systems with them, which tend to lower the total cost of ownership over time. And this is why, SiC devices, despite being more expensive, are seeing increasing uptake across several markets, including EVs, fast-charging infrastructure, renewable energy, data centers and AI infrastructure, industrial automation, and for electrical grid modernization.
Therefore, SiC production capacity is increasing very rapidly. McKinsey estimated that capacity will grow from around 2.8 million 150mm wafer equivalents in 2023 to approximately 10.9 million equivalents by 2027, a capacity CAGR of roughly 40% per year. Equipping was initially supported by very strong growth in EVs, although most of the current focus is on AI infrastructure.
Companies like Infineon, Wolfspeed, STMicroelectronics and a number of Chinese vendors are in a race to build capacity and take SiC market share. As SiC production capacity continues to expand globally, demand for Amtech's thermal processing equipment and related consumables should also continue to increase. In build cycles, capacity initially exceeds demand, and is then filled over time, with increasing loads benefiting margins.
Management mentioned strong double-digit growth in recurring revenue streams across both segments in the last quarter and called out the AI infrastructure market as a major growth driver. Additionally, they stated that the significant margin improvements came from discontinuing low-margin product lines and the migration to a semi-fabless manufacturing model over the past two years.
In the last quarter, Amtech posted a positive surprise of 100% as earnings of 10 cents were double the estimated 5 cents. For the year ending September 2026, the Zacks Consensus Estimate has gone from 25 cents to 32 cents in 60 days, up 28%. The estimate for 2027 was raised 6.6% during the same time.
The Zacks Rank #2 (Buy) ranked stock is up 431.1% in the past year.
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