Semiconductor companies and their customers are major contributors to the current market momentum. This means that finding and buying under-the-radar growth stocks in the semiconductor industry might provide high returns.
One example of this kind of investing is Super Micro Computer (NASDAQ:SMCI), which experienced tremendous growth by capitalizing on the AI boom, developing AI-optimized servers, and introducing innovative liquid-cooled data centers. Strategic collaborations, such as building a large-scale AI data center in Asia optimized for Nvidia’s (NASDAQ:NVDA) AI software, have further driven their significant revenue growth and market expansion.
With strong market positions, innovative product offerings, and geographic strategic expansions, these three companies are well-positioned to replicate Super Micro Computer’s rapid growth. Each company addresses high-growth sectors in the AI, automotive, and areas of advanced semiconductor manufacturing that have paved their way toward success.
Finally, these companies’ fundamentals— such as revenue diversification, product innovation, and financial stability — provide signs to explain their untapped growth potential and expansion stability.
ACM Research (ACMR)
ACM Research (NASDAQ:ACMR) leads in the development and manufacturing of advanced wafer processing technologies for semiconductors and related industries. ACMR had a high revenue increase of 105% annually, reaching $152.2 million in Q1 2024. This growth was derived primarily from the strong performance of single-wafer cleaning products, Tahoe, and semi-critical cleaning. These collectively grew by 199% to $109.5 million, and this segment now represents 72% of total revenue, reflecting its critical contribution to ACMR’s financial standing and growth trajectory.
Moreover, ACMR has strategically expanded its product portfolio, focusing on high-demand areas like single-wafer cleaning technologies. It captured a considerable portion (25%–30%) of the total front-end cleaning market. The company attained a gross margin of 52.5%, surpassing its expected range of 40% to 45%. This margin strength reflects an operational edge and a favorable product mix. These elements contribute to uplifted profitability despite market fluctuations. Finally, the operating margin expanded considerably to 26.2% from 14.7% annually. This increase underscores ACMR’s effective cost management and operational leverage as they scale their business and capitalize on growing market opportunities.
Overall, ACMR’s strong top-line growth and expanding product portfolio make it a high pick among the top under-the-radar growth stocks.
Himax Technologies (HIMX)
Himax Technologies (NASDAQ:HIMX) provides display imaging processing technologies. Despite a sequential revenue decline of 8.8% in Q1 2024, Himax exceeded its guidance range. This indicates a robust operational edge and possibly conservative forecasting. The company had attained a gross margin of 29.3%, breaching the guidance of around 28.5%, suggesting sharp cost management and a favorable product mix. The automotive segment contributed considerably to revenue, around 46% in Q1 2024, with expectations of growth driven by design-win projects and expanding adoption of technologies like TDDI and local dimming Tcon. Hence, this indicates Himax’s lead and strong customer relationships in this booming market.
Additionally, Himax is a leader in fields such as AI sensing solutions (WiseEye), automotive TDDI, and display applications (tablet, laptop, and automobile). This demonstrates Himax’s core capacity to expand its product offerings across industries with rapid development. The company’s cash position is $277.4 million as of Q1 2024, indicating a robust financial sheet, an increase from $223.8 million (Q1 2023). This liquidity supports both strategic goals and operational demands.
Therefore, Himax is one of the top under-the-radar growth stocks because it concentrates on high-growth industries.
Magnachip Semiconductor (MX)
Magnachip Semiconductor (NYSE:MX) designs and manufactures analog and mixed-signal semiconductor products. In Q1 2024, Magnachip had a top line of $49.1 million. This was within the guidance range and demonstrated sequential growth in their standard product business by 10.6%. This growth indicates improving market conditions and a potential end to inventory corrections in certain verticals.
2Specifically, in Magnachip’s standard product business, Mobile Display Solutions (MSS), revenue was $9.0 million, up 5.2% sequentially. This growth was driven by increased demand for automotive LCD and OLED products. Similarly, Power and Analog Solutions (PAS) revenue was $36.5 million, up 12% sequentially, driven by demand in industrial e-motor markets, consumer appliances, and server power.
Further, Magnachip’s consolidated gross profit margin was 18.3%, within the guided range of 17% to 20%. This is primarily due to lower Gumi fab utilization from the wind-down of Transitional Foundry Services. The MSS gross profit margin improved considerably to 44.6% in Q1 2024. This is led by non-recurring engineering revenue and higher-than-expected revenue from first-generation Display Driver ICs.
To conclude, Magnachip’s strategic focus on high-growth sectors and expanded margins point to its potential among under-the-radar growth stocks.
As of this writing, Yiannis Zourmpanos held a long position in ACMR. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.