3 Semiconductor Stocks to Buy on Cyclical Weakness

As the backbone of modern innovation, semiconductors quietly fuel everything from our smartphones to cutting-edge artificial intelligence (AI). While demand for these chips is broadly on the rise, some stocks in this space just pulled back after earnings due to cyclical weakness, presenting intriguing buy-the-dip opportunities.

Specifically, shares of semiconductor giants like NXP Semiconductors N.V. (NXPI), Cirrus Logic, Inc. (CRUS), and Silicon Laboratories Inc. (SLAB) reacted negatively after earnings, with weak guidance related to segments including analog, industrial, and automotive. But this weakness isn’t company-specific, and in a historically cyclical industry like semiconductors, buying these dips can work to an investor’s advantage.

Analysts see strong potential for these stocks to rebound, making them solid picks for those seeking long-term gains as demand ramps back up. For investors in search of reasonably priced tech stocks to scoop up now, these semiconductor stocks could offer a unique entry point amid temporary turbulence.

Semiconductor Stock #1: NXP Semiconductors

Netherlands-based NXP Semiconductors N.V. (NXPI) is a Dutch powerhouse in the semiconductor world, sporting a $58.9 billion market cap. NXP drives innovations in automotive tech, Internet of Things (IoT), mobile, industrial, and communications with its high-performance chips. With a footprint spanning the Americas, Europe, the Middle East, and Asia-Pacific, NXP’s influence reaches globally, securing the stock a place in both the S&P 500 Index ($SPX) and the Nasdaq-100 Index ($IUXX) indexes.

NXP Semiconductors has had a solid year, with its stock climbing 27% over the past 52 weeks, though it’s still lagging behind the S&P 500 and the Nasdaq-100. The stock fell 5% on Nov. 5, though, as the company presented a weaker-than-expected Q4 outlook, acknowledging lingering weakness in the analog and industrial segments. 

NXP reported revenue for the third quarter of $3.25 billion, a 5% decline annually, with adjusted earnings of $3.45 per share, or $890 million.

The company’s automotive segment generated $1.82 billion in revenue, a slight dip of 3%, while its Industrial & IoT business sales declined 7% annually to $563 million. Margins held steady, with a non-GAAP gross margin of 58.2% and an operating margin of 35.5%. NXP closed the quarter with a cash reserve of $3.14 billion, down from $4.04 billion the previous year.

For Q4, management guided for revenue in the band of $3 billion to $3.2 billion, with gross margin expected between 57% and 58%. Earnings for the quarter are anticipated to be between $2.93 and $3.33 per share.

Analysts tracking NXP Semiconductors predict EPS of $11.94 in fiscal 2024, down 6% annually, with the bottom line projected to surge in fiscal 2025 by 12.1% to $13.38.

NXPI is currently priced around 19.84x forward earnings, a discount to the tech sector median. This valuation offers investors a reasonable entry into the semiconductor market, especially for a company with a proven track record in automotive and IoT tech.

The company also rewards its shareholders with a solid dividend. On Oct. 9, NXP paid out $1.014 per share, adding up to an annualized $4.06 per share yield, or about 1.75%. With a payout ratio of 32.48%, NXPI balances growth and shareholder returns.

NXPI stock has a consensus “Strong Buy” rating overall. Among the 24 analysts covering the stock, 14 suggest a “Strong Buy,” two advise a “Moderate Buy,” seven analysts have a “Hold” rating, and one analyst has a “Strong Sell.”

The mean price target for NXPI is $289.52, indicating an upside potential of 21.7% from current levels. The Street-high target price of $370 implies that the stock could rally as much as 56.9%.

Semiconductor Stock #2: Cirrus Logic

Founded in 1984 and headquartered in Austin, Cirrus Logic, Inc. (CRUS) has carved its niche in high-performance, low-power semiconductor tech, boasting a market cap of $5.5 billion. The fabless chip designer powers everything from smartphones to AR/VR headsets with standout audio and mixed-signal processing solutions. Cirrus brings richer sound and smart capabilities to numerous consumer devices, from amplifiers to innovative codecs and battery solutions.

Cirrus Logic had a strong run, with its stock climbing 43.2% over the past 52 weeks and notching a 14% gain in the last six months alone. However, the stock’s momentum took a hit recently, as CRUS shares dropped 7% on Nov. 5 after a soft forecast for fiscal Q3.

Cirrus reported fiscal Q2 2025 adjusted EPS that soared 25% year over year to $2.25 per share and net sales of $541.9 million, up 12.6% annually to surpass Wall Street’s projections. The company credited robust demand for its smartphone tech and impressive expansion in the laptop space for the revenue growth, which hit near the top of its guidance range.

Cirrus exited the quarter with cash and marketable securities of $478.3 million, up from $312.4 million a year ago, and generated $8.2 million from operations. Plus, free cash flow amounted to $5.5 million in Q2.

The quarter also marked the debut of innovations including a custom boosted amplifier and a smart codec with 22-nanometer tech, featured in newly launched smartphones. Plus, Cirrus scored a big win in the laptop market, securing a high-volume design with its latest PC codec and debuting its power products in multiple tier-one customers’ devices.

Looking forward, Cirrus projects Q3 revenue between $480 million and $540 million, with gross margins expected in the 51% to 53% range. With a broad product lineup and a clear roadmap, Cirrus Logic aims to capitalize on growing tech demand, especially as it strengthens its presence in both the smartphone and PC markets, positioning itself for continued growth.

Analysts project CRUS’ profit to grow 4.7% annually to $5.37 per share in fiscal 2025 and then jump another 7.1% to $5.75 per share in fiscal 2026. Priced at 20.59 times forward earnings and 3.05 times sales, CRUS trades at a discount to not only the tech sector medians but also its historical averages.

CRUS stock has a consensus “Moderate Buy” rating overall. Among the seven analysts covering the stock, four suggest a “Strong Buy,” and the remaining three analysts recommend a “Hold.”

The mean price target of $134 suggests a potential upside of 29.5% from the current levels. The Street-high target of $165 suggests the stock could rally as much as 59.3%.

Semiconductor Stock #3: Silicon Laboratories

Austin-based Silicon Laboratories Inc. (SLAB) has been shaping wireless tech since 1996. This fabless semiconductor pioneer powers the IoT with secure, smart solutions tailored for connected devices worldwide. From homes to factories, SLAB’s integrated platform makes it easier to build next-gen wireless applications. Now a key player in IoT, Silicon Labs commands a $3.8 billion market cap and keeps pushing the boundaries of connectivity.

Silicon Labs has had a stellar year, rallying 21.6% over the past 52 weeks, including a swift 20.9% gain in the last three months alone. But like its peers, SLAB closed lower post-earnings after issuing a soft Q4 outlook.

Silicon Laboratories reported fiscal Q3 revenue of $166.4 million, up 14% sequentially to edge past Wall Street’s estimates, and a better-than-expected non-GAAP loss of $0.13 per share. These figures exceeded the midpoint of the company’s guidance.

Moreover, the company’s non-GAAP gross margin held strong at 54.5%, while its cash reserves rose 33.2% from year-end to $303.1 million.

Silicon Labs is carving out a niche in high-growth markets like connected health, smart metering, and commercial retail. Its Series 2 and Series 3 platforms, featuring AI and machine learning advancements, are gaining traction, while the rollout of the Wi-Fi 6-powered 917 device promises better battery life and robust customer engagement.

Looking ahead, management projects Q4 gross margins between 54% and 55%, with a non-GAAP per-share loss estimated between $0.01 and $0.21. This growth story, driven by innovation and resilient financials, positions Silicon Labs as a standout in a competitive chip market.

Analysts tracking Silicon Laboratories project the company to report a loss of $3.41 per share in fiscal 2024, before swinging to a profit of $0.71 in fiscal 2025.

SLAB has a consensus “Moderate Buy” rating overall. Of the 10 analysts in coverage, three recommend a “Strong Buy,” one suggests a “Moderate Buy,” and the remaining six have a “Hold.”

The average analyst price target for SLAB is $128.28, indicating a potential upside of 12.4%. The Street-high target price of $160 implies a 31.4% upside potential.

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On the date of publication, Sristi Suman Jayaswal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.