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.

Wolfspeed is another leading company that has a premium valuation due to the company’s expertise in Silicon Carbide chips. The company’s revenue is expected to grow 38% this year and 44% in the next year. According to MarketsandMarkets, the Silicon Carbide market is expected to grow at a compound annual growth rate of 19% from 2021 to 2026. Hybrid and electric cars are the future growth drivers for Silicon Carbide.

The company recently entered a deal with Lucid Motors to supply Silicon Carbide devices from the newly opened Mohawk Valley Fab. According to Gregg Lowe, CEO of Wolfspeed, “As the world advances towards an all-electric future for transportation, Silicon Carbide technology is at the forefront of the industry’s transition to EVs, enabling superior performance, range and charge time. Our investment in the Mohawk Valley Fab ensures our customers, including Lucid, have access to the advanced products they need to deliver innovative solutions to the market.”

Nvidia has seen some weakness recently due to the broader tech sell-off. However, the company deserves a premium valuation due to the company’s growth prospects in the AI data center and solid long-term prospects in the automotive chip industry.

Quarterly Revenue Surprise

Source: YCharts

Cirrus Logic crushed analysts’ consensus revenue estimates by 17%. The company’s Q4 FY2022 revenue grew by 67% YoY to $490 million. The company’s guidance for the next quarter is between $350 million to $390 million, representing a YoY growth of 26% at the mid-point of the guidance. It was higher than the analysts’ consensus estimates of $295 million. John Forsyth, CEO of the company, said, “We delivered strong financial results in FY22 as revenue increased 30 percent year over year driven by high-performance mixed-signal content gains.”

Top 5 ranked semiconductor stocks based on Free Cash Flow Margin

Source: YCharts

Cirrus Logic not only beat analysts’ revenue estimates it also ranked the highest among the semiconductor companies with the highest free cash flow margins. This is an important financial metric in the current environment as we have noticed in the current earnings season that many companies that fell short in this metric the shares got sold off.

Top 5 ranked semiconductor stocks based on Net Profit Margin

Source: YCharts

In the above chart, Indie Semiconductor, which we discussed earlier in our article, also ranked the highest among the companies with the highest net profit margins. Intel ranks third in the category. However, the company faces significant competition from AMD, which can be seen in the lower valuation the company is trading.

Royston Roche contributed to this article.

Please note: The I/O Fund conducts research and draws conclusions for the company’s portfolio. We then share that information with our readers and offer real-time trade notifications. This is not a guarantee of a stock’s performance and it is not financial advice. Please consult your personal financial advisor before buying any stock in the companies mentioned in this analysis. Beth Kindig and the I/O Fund own shares in AMD and NVDA at the time of writing.