Which microchip stocks are considered undervalued right now?

Whether a stock is undervalued is subjective, depending on your investment analysis and preferences. That said, companies like Micron and Taiwan Semiconductor are often considered undervalued relative to their peers and their long-term growth prospects. These companies benefit from strong AI demand and critical industry positioning as players in the high-performance memory and foundry segments, respectively, which could benefit investors well into the next decade.

Do microchip companies pay dividends?

Yes, many microchip stocks pay dividends, including major players like Applied Materials, Broadcom, Qualcomm, and Micron.

Should I invest in individual microchip stocks or ETFs?

That depends on a range of factors. You'll want to consider your risk tolerance, investment knowledge, time horizon, and whether you prefer the potential for higher returns from individual growth stocks or the stability of diversification offered by an ETF.

How do microchip companies make money?

The core business model for most microchip companies is the sale of physical semiconductor components to original equipment manufacturers and electronics manufacturing service providers across a vast array of industries, including automotive companies, data centers, consumer electronics businesses, industrial automation companies, and aerospace and defense players. Companies also license proprietary chip designs or specific technology, allowing other chip designers or manufacturers to incorporate pre-tested, specialized technology, such as high-performance memory interfaces or security features, into their own products. The licensing company receives fees and/or royalties for the use of its patented technology.

Are microchip stocks suitable for long-term investing or short-term trading?

Microchip stocks are generally better suited for long-term investing due to the high demand for AI, cloud computing, and automotive electronics, which are poised to drive years-long growth. The sector is highly volatile and cyclical, so short-term trading could significantly increase the risk of permanent portfolio losses. For long-term investors, it's best to buy shares only of companies that you intend to keep in your portfolio for a minimum of three to five years.

Are microchip stocks more volatile than other tech stocks?

Yes, microchip stocks are generally more volatile than many other tech sectors because they are highly cyclical and susceptible to boom-and-bust demand cycles. Their prices fluctuate significantly due to capital-intensive manufacturing, global economic conditions, and the competitive landscape, especially within the AI sector.

Best Microchip Stocks to Buy in 2026 and How to Invest

Best Microchip Stocks to Buy in 2026 and How to Invest in Them

By Rachel Warren – Updated Apr 17, 2026 at 12:22 PM EST | Fact-checked by Margo Winton Parodi

Key Points

Nvidia leads in AI chip production, powering data centers and cloud AI applications.
Taiwan Semiconductor dominates advanced chip fabrication, crucial for global tech leaders.
ASML supplies critical equipment for microchip production, fuelling long-term industry growth.

Microchip stocks represent companies that make the electronic components powering every modern device, from smartphones and data centers to vehicles and industrial equipment. These chips form the backbone of today's digital economy.

Although microchip companies fall under the technology sector, they are also capital-intensive manufacturers. Demand for chips moves in cycles, with periods of rapid growth often followed by slowdowns. Even so, leading chipmakers have delivered strong long-term returns by scaling production and staying ahead of technological shifts.

Top microchip stocks

For investors looking for exposure to essential technology with long-term demand drivers, these microchip stocks deserve a closer look.

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Ticker Information Table
Name and ticker	Market capMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.	Dividend yield	Industry
	$5.3 trillion	0.13%	Semiconductors and Semiconductor Equipment
	$2.1 trillion	0.84%	Semiconductors and Semiconductor Equipment
	$2.0 trillion	0.61%	Semiconductors and Semiconductor Equipment
	$646.8 billion	0.54%	Semiconductors and Semiconductor Equipment
	$165.4 billion	2.28%	Semiconductors and Semiconductor Equipment
Advanced Micro Devices (NASDAQ:AMD)	$786.0 billion	0.00%	Semiconductors and Semiconductor Equipment
Applied Materials (NASDAQ:AMAT)	$424.2 billion	0.36%	Semiconductors and Semiconductor Equipment
	$10.6 billion	0.00%	Semiconductors and Semiconductor Equipment
Coherent (NYSE:COHR)	$64.2 billion	0.00%	Electronic Equipment, Instruments and Components
Lattice Semiconductor (NASDAQ:LSCC)	$17.6 billion	0.00%	Semiconductors and Semiconductor Equipment

Data as of Aug 6, 2026. Showing 10 of 10 total entries.

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1. Nvidia

Nvidia (NVDA +3.44%) is one of the most recognizable names in the semiconductor industry. It got its start as a developer of specialized chips, called graphics processing units (GPUs), used in high-end video games, and some of Nvidia's revenue still comes from its video game segment.

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NASDAQ: NVDA

Nvidia

Today's Change

(3.44%) $7.28

Current Price

$219.22

Key Data Points

Market Cap

$5.3T

Day's Range

$216.40 - $222.22

52wk Range

$164.07 - $236.54

Volume

158.2M

Avg Vol

153.3M

Gross Margin

74.15%

Dividend Yield

0.13%

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However, Nvidia has spurred a revolution in computing by extending GPUs' usefulness beyond gaming. Its hardware now powers artificial intelligence (AI) for businesses through its data center chip designs, including generative AI services such as ChatGPT. Data centers are now its largest segment by revenue.

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Artificial Intelligence

Artificial intelligence is the use of machines to mimic human intelligence.

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The company has pushed its technology even further. It powers devices with computing intelligence, including robotics in factories and warehouses, self-driving-car features for automakers, and medical devices and research. Nvidia also has cloud subscription services that enable AI-fueled applications built atop its leading GPU business.

2. Taiwan Semiconductor

Taiwan Semiconductor (TSM -0.76%) has built itself into the world's largest microchip manufacturer. It took the crown from Intel (INTC +0.20%) several years back, and steady investment in increasingly advanced chip fab capabilities has paid off.

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NYSE: TSM

Taiwan Semiconductor Manufacturing

Today's Change

(-0.76%) $-3.17

Current Price

$414.00

Key Data Points

Market Cap

$2.1T

Day's Range

$413.07 - $426.30

52wk Range

$223.70 - $479.00

Volume

12.8M

Avg Vol

14.4M

Gross Margin

63.38%

Dividend Yield

0.84%

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Most of its fabs are in Taiwan, though a number are elsewhere, including in the U.S. They can handle the most complex chip designs (like those for the Apple (AAPL +0.52%) iPhone and Nvidia's data center chips).

Taiwan Semiconductor holds more than half of the advanced microchip fabrication market, and its ongoing investment in new and advanced production has kept demand steadily rising. It also pays a modest dividend to shareholders.

3. Broadcom

Broadcom (AVGO +0.03%) is a chip giant helping power everything from 5G mobile network development to data centers and industrial equipment. What Broadcom lacks in high-octane growth, it more than makes up for in profitability.

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NASDAQ: AVGO

Broadcom

Today's Change

(0.03%) $0.12

Current Price

$418.28

Key Data Points

Market Cap

$2.0T

Day's Range

$416.89 - $427.00

52wk Range

$281.87 - $495.00

Volume

16.9M

Avg Vol

26.1M

Gross Margin

65.66%

Dividend Yield

0.61%

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Acquisitions have been key to Broadcom's profitability. It also returns about half of the previous year's free cash flow to shareholders through dividends and supplements those dividends with share repurchases.

4. ASML

Chip fabs, such as Taiwan Semiconductor, Intel, and Samsung (SSNL.F +0.00%), need advanced equipment to manufacture the chips. One of the largest such industrial machinery makers (by market cap) is Netherlands-based ASML (ASML -1.97%).

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NASDAQ: ASML

ASML

Today's Change

(-1.97%) $-33.67

Current Price

$1,678.22

Key Data Points

Market Cap

$647B

Day's Range

$1671.75 - $1729.06

52wk Range

$706.62 - $1999.96

Volume

1.2M

Avg Vol

Gross Margin

52.73%

Dividend Yield

0.54%

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ASML makes EUV (extreme ultraviolet) lithography machines that form the smallest features on microchips, and its flagship machines cost around $400 million each. Due to its critical position in the semiconductor ecosystem, ASML has experienced strong growth for years and is highly profitable.

The result has been a fantastic chip investment that has steadily increased both its share price and dividend payout for almost two decades.

5. Qualcomm

Qualcomm (QCOM -3.16%) was a darling of the chip industry during the 2000s and 2010s, riding the wave of mobility as smartphones went from a novel idea to a part of everyday life. The smartphone market isn't as high-growth as it once was, but the development of 5G mobile networks has breathed new life into Qualcomm.

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NASDAQ: QCOM

Qualcomm

Today's Change

(-3.16%) $-5.14

Current Price

$157.53

Key Data Points

Market Cap

$165B

Day's Range

$157.10 - $162.80

52wk Range

$121.99 - $259.92

Volume

9.7M

Avg Vol

21M

Gross Margin

54.23%

Dividend Yield

2.28%

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Almost every mobile phone on the planet has a piece of Qualcomm silicon. The company has diversified its business in recent years, designing parts for network equipment used to create mobile signals, industrial devices, connected home appliances, virtual reality headsets, and a fast-growing automotive technology segment.

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6. Advanced Micro Devices

Advanced Micro Devices (AMD -7.04%), known as AMD, has historically played second fiddle to Intel. But back in 2009, AMD offloaded its chip fab segment -- now known as GlobalFoundries (GFS -4.92%) -- to focus solely on chip design. The move has paid off. Although AMD is still far smaller than Intel, it has been gaining serious market share in both the data center and personal computing markets.

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NASDAQ: AMD

Advanced Micro Devices

Today's Change

(-7.04%) $-36.53

Current Price

$482.05

Key Data Points

Market Cap

$786B

Day's Range

$478.20 - $502.00

52wk Range

$149.22 - $584.73

Volume

49.6M

Avg Vol

32.8M

Gross Margin

47.09%

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Central processing units (CPUs), an integral part of data centers, are in increased demand as remote work and internet-delivered services have become more common. AMD has won over many customers with its leading microchip designs, benefits from a growing industry, and is taking market share from longtime rival Intel.

Its $50 billion purchase of Xilinx in 2022 also set a floor for profitability, giving AMD room to invest more aggressively in research and development (R&D).

7. Applied Materials

Applied Materials (AMAT -2.27%), one of the oldest names in the semiconductor industry, has a deep understanding of microchips, how they're made, the materials used to make them, and their role in an overall computing system. Chip fab equipment has been consolidated into a few major companies over the years. Lam Research (LRCX -3.25%) and KLA (KLAC -1.36%) are two more major players.

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NASDAQ: AMAT

Applied Materials

Today's Change

(-2.27%) $-12.38

Current Price

$534.24

Key Data Points

Market Cap

$424B

Day's Range

$530.57 - $554.08

52wk Range

$154.47 - $739.67

Volume

5.4M

Avg Vol

9.8M

Gross Margin

48.96%

Dividend Yield

0.36%

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When a chip manufacturer updates or expands a plant, or breaks ground on a new one, it's almost certain that Applied Materials will sell them some equipment. The company also has a sizable revenue stream from ongoing service to equipment purchased by customers.

8. Rambus

Rambus (RMBS -3.23%) makes high-performance memory interface chips and silicon intellectual property (IP) cores for data processing and security, providing solutions for data center, automotive, and AI applications.

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NASDAQ: RMBS

Rambus

Today's Change

(-3.23%) $-3.25

Current Price

$97.30

Key Data Points

Market Cap

$11B

Day's Range

$96.85 - $103.95

52wk Range

$67.15 - $174.10

Volume

2.2M

Avg Vol

Gross Margin

74.46%

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Rambus' products are used to increase data bandwidth and capacity, protect sensitive data, and address bottlenecks between processing and memory in modern computing systems.

The company makes money through both direct sales of its chips and licensing its patented IP to other chip manufacturers and system designers. Its key IP licensing partners include SK Hynix (KOSE:A000660), Micron (MU +0.06%), AMD, and Nvidia.

9. Coherent

Coherent (COHR +1.39%) manufactures and sells a broad range of laser products, optical components, and materials used in various markets, including data centers, consumer electronics, industrial applications, and aerospace and defense. It is an essential supplier to the semiconductor industry, providing the technology and materials used to manufacture, test, and package advanced chips.

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NYSE: COHR

Coherent

Today's Change

(1.39%) $4.49

Current Price

$328.22

Key Data Points

Market Cap

$64B

Day's Range

$319.40 - $347.66

52wk Range

$84.35 - $440.00

Volume

5.8M

Avg Vol

5.9M

Gross Margin

37.93%

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Coherent is a major supplier of optics for the high-power lasers used in EUV lithography. The company also develops and manufactures specialized composite materials, such as reaction-bonded silicon carbide, which is used for structural components in semiconductor capital equipment.

Coherent is a vertically integrated supplier of datacom transceivers for data centers, too, including silicon photonics and other components.

10. Lattice Semiconductor

Lattice Semiconductor (LSCC -7.02%) develops low-power, small-form-factor, field-programmable gate arrays (FPGAs) and related software tools. FPGAs are integrated circuits that can be reconfigured after manufacturing, enabling them to adapt to evolving needs and new functions, unlike traditional fixed-function chips.

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NASDAQ: LSCC

Lattice Semiconductor

Today's Change

(-7.02%) $-9.69

Current Price

$128.31

Key Data Points

Market Cap

$18B

Day's Range

$125.82 - $138.61

52wk Range

$58.53 - $157.01

Volume

4.2M

Avg Vol

2.1M

Gross Margin

62.17%

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The company's FPGAs are designed to handle AI and machine learning workloads on embedded systems, such as those found in sensors and other devices at the network's edge. Lattice specifically focuses on low-power FPGAs, which are crucial for battery-powered devices and systems where energy consumption is a concern.

In addition to hardware, Lattice provides comprehensive software and IP bundles to simplify development. Its products are used in various industries, including robotics, factory automation, smart devices, and vehicle systems.

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Pros and cons of investing in microchip stocks

Here are the pros and cons to consider before you invest in microchip stocks.

Pros

Integral to modern technology: Microchips are the fundamental components in almost all modern electronics. This makes them essential to the global economy and positions the industry for sustained growth.
Driven by emerging technologies: The increasing demand for advanced technologies, such as AI, 5G, high-performance computing, and the Internet of Things (IoT), will continue to drive semiconductor industry growth.
High barriers to entry: There are massive capital requirements, significant R&D costs, and specialized expertise needed to produce advanced chips.

Cons

High volatility and cyclicality: The semiconductor industry experiences boom-and-bust cycles, with demand fluctuating due to global economic conditions, technological shifts, and supply-and-demand imbalances. This can lead to significant price swings.
Intense competition: Companies must innovate constantly to produce smaller, faster, and more efficient chips. Failure to keep up with technological advancements can lead to lost market share and revenue.
High capital expenditure and complexity: Chip manufacturing is extremely expensive, requiring large-scale investments in manufacturing facilities and R&D. A few missteps in demand forecasting can lead to costly inventory issues.

How to compare microchip stocks

Not all microchip companies operate the same way, and their business models carry different risk and return profiles.

Fabless designers: Companies like Nvidia and AMD focus on chip design and outsource manufacturing. This avoids heavy capital spending but relies on third-party foundries for production.
Foundries: Taiwan Semiconductor manufactures chips for other companies. Foundries require enormous capital investment but benefit from long-term customer demand and scale advantages.
Equipment suppliers: Companies such as ASML and Applied Materials sell specialized machinery for chip manufacturing. Their performance often tracks long-term investment cycles rather than individual chip demand.
Specialized component makers: Firms such as Lattice Semiconductor and Rambus focus on niche markets, such as low-power chips or memory interfaces.

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Investing in microchip stocks FAQ

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About the Author

Rachel Warren is a contributing Motley Fool stock market analyst covering pharmaceuticals, biotechnology, medical devices, information technology, and consumer goods. Prior to The Motley Fool, Rachel was a paralegal and legal administrator. She holds a bachelor’s degree in paralegal studies from Liberty University School of Law.

TMFRachelW

Rachel Warren has positions in Apple. The Motley Fool has positions in and recommends ASML, Advanced Micro Devices, Apple, Applied Materials, Coherent, Intel, Lam Research, Micron Technology, Nvidia, Qualcomm, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.

Best Microchip Stocks to Buy in 2026 and How to Invest in Them

Key Points

Top microchip stocks

1. Nvidia

Key Data Points

2. Taiwan Semiconductor

Key Data Points

3. Broadcom

Key Data Points

4. ASML

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5. Qualcomm

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6. Advanced Micro Devices

Key Data Points

7. Applied Materials

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8. Rambus

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9. Coherent

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10. Lattice Semiconductor

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Pros and cons of investing in microchip stocks

Pros

Cons

How to compare microchip stocks

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Top microchip stocks

Key Data Points

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Pros and cons of investing in microchip stocks

Pros

Cons

How to compare microchip stocks

Investing in microchip stocks FAQ

How to invest in microchip stocks

Should you buy individual microchip stocks or an ETF?

Trends in the microchip industry

Which microchip stocks are considered undervalued right now?

Do microchip companies pay dividends?

Should I invest in individual microchip stocks or ETFs?

How do microchip companies make money?

Are microchip stocks suitable for long-term investing or short-term trading?

Are microchip stocks more volatile than other tech stocks?

1. Nvidia

2. Taiwan Semiconductor

3. Broadcom

4. ASML

5. Qualcomm

6. Advanced Micro Devices

7. Applied Materials

8. Rambus

9. Coherent

10. Lattice Semiconductor