When a company like SK Hynix commits US$38.1b to new memory plants, it signals that the race to supply chips for AI and data centers is entering a new phase. That kind of spending can reshape expectations for suppliers, competitors, and customers, which creates both openings and tripwires for investors. This article walks through 3 large semiconductor stocks exposed to this news and how each might fit, or not fit, in a watchlist.

The three large semiconductor stocks in this article are only a first pass, and the full screen surfaced 38 more companies with equally compelling stories that are not covered here. To go straight to the source, use the Semiconductor Industry screener to identify, filter, and analyze semiconductor opportunities with the highest conviction.

Semtech (SMTC)

Semtech is a US$11.3b semiconductor company that supplies analog and mixed-signal chips, IoT modules, and cloud connectivity services used in data centers, communications gear, and industrial devices. Revenue is spread across three main segments, with Analog Mixed Signal and Wireless at about US$383.6 million, IoT Systems and Connectivity at roughly US$355.3 million, and Signal Integrity at around US$351.1 million.

Semtech sits right in the traffic lane of the SK Hynix buildout because its signal integrity and connectivity chips help move data around AI servers and memory hungry infrastructure. Management is already treating this as a “generational” AI opportunity and is ramping investment and capacity for data center products. Analysts see strong growth potential but also flag high expectations and a rich valuation. The company is back to generating profits and has fresh credit facilities in place, yet still carries funding and volatility risks that could matter if AI spending cools. For investors, the balance between AI-related opportunities and execution, debt, and pricing risks is what makes Semtech a candidate for closer examination.

Semtech’s AI story is accelerating, but the real question is how its balance of growth, margins, and funding risk stacks up against expectations. Get the fuller picture in the analysis report for Semtech

Build your own AI infrastructure shortlist

Semtech and the two other semiconductor stocks in this list all came out of a single screen, but the real edge comes when you set the filters yourself. Use our flexible Screener to mix criteria like valuation, future growth, balance sheet strength, and risks, or tap into our curated Investing Ideas for ready made starting points.

Broadcom (AVGO)

Broadcom is a global digital infrastructure company that designs semiconductor chips and provides infrastructure software used in data centers, AI networking, cloud computing, and enterprise IT. It generates about US$47.8b from Semiconductor Solutions and US$27.7b from Infrastructure Software, which gives it exposure to both hardware and recurring software revenue. The company is very large, with a market value of roughly US$1.99t.

Broadcom sits at the heart of AI infrastructure, from custom accelerators and high bandwidth networking chips to VMware software that helps large customers run private clouds and secure their data. Profitability metrics such as a 33.4% ROE and 38.8% net margin suggest a business with real pricing power. At the same time, a high P/E, heavy use of debt funding, concentrated dependence on a handful of hyperscalers, and recent insider selling mean expectations are high and execution needs to stay tight. With SK Hynix and others pouring money into AI focused memory and data centers, the question for investors is how Broadcom’s central role in that build out, and its mix of strengths and risks, translate into long term value beyond what the current share price already assumes.

Broadcom’s AI engine is humming; however, the mix of high margins, rich P/E, and debt heavy funding raises a sharper question. Get the full story in the 3 key rewards and 2 important warning signs

Credo Technology Group Holding (CRDO)

Credo Technology Group Holding develops high speed connectivity chips, cables, and IP that link AI servers, memory, and storage inside data centers. Its products span active electrical cables, optical transceivers, memory interconnects, and SerDes IP. The company currently generates about US$1.34b from semiconductors and has a market value of roughly US$41.9b.

Credo sits at the point where SK Hynix’s large memory buildout meets the wiring of AI data centers, supplying the links that move data between GPUs and the new memory capacity. Earnings and revenue are both forecast to grow at around 27% per year, supported by current profitability metrics such as a 35.4% net margin and 22.9% ROE. At the same time, the stock trades on a 91x P/E with price targets and cash flow estimates that indicate valuation risk. In addition, the stock has experienced significant share price swings, insider selling, and relies on funding from higher risk external sources. This combination makes Credo an AI connectivity company that may warrant close attention rather than automatic enthusiasm.

Credo’s AI connectivity story is accelerating, yet a 91x P/E hints that enthusiasm and risk may be tightly linked. Get the context around that trade off in the 2 key rewards and 2 important warning signs

Seeking Fresh Alternatives Beyond Semiconductors?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.