The global macroeconomic environment and market volatility have put immense pressure on the Zacks Electronics – Semiconductors industry. Geo-political tensions, forex challenges, and inflationary pressures have all made a significant impact on the industry’s outlook. The industry has, however, seen several players like Advanced Micro Devices (AMD), ASE Technology (ASX), Cirrus Logic (CRUS) and QuickLogic (QUIK) benefit from the rising demand for consumer electronic devices and innovative technological solutions.

The Zacks Electronics – Semiconductors industry caters to various end-markets and provides cutting-edge semiconductor technologies, packaging and test services, and intelligent and connected products. These companies are investing heavily in research and development to adapt to technological advancements and changing industry standards. The industry is currently witnessing a surge in demand for advanced electronic equipment, prompting firms to enhance their investments in cost-effective process technologies.

Shaping the Future of the Electronics – Semiconductors Industry

Macroeconomic Headwinds and Geo-political Tensions: Rising inflationary pressure and fears of global recession are negatively impacting deal wins. Moreover, ongoing geo-political tensions, such as the Russia-Ukraine war and trade restrictions between the United States and China, are creating headwinds for the industry. The current scenario has caused enterprises to be wary of signing multi-year deals worldwide.

Boost from Smart Devices: The demand for smart devices with computing and learning capabilities has created opportunities for the industry as these devices require high processing power, speed, memory, and efficient graphic processors and solutions.

Zacks Industry Rank and Outlook

The Zacks Electronics – Semiconductors industry currently carries a Zacks Industry Rank #189, placing it in the bottom 25% of more than 250 Zacks industries. The negative earnings outlook for the industry is evident from the aggregate earnings estimate revisions. Industry earnings estimates for the current year have moved 4.2% down since September 30, 2023.

Despite the gloomy industry outlook, the Zacks Electronics – Semiconductors industry has outperformed the broader market and sector, rallying 74.6% in the past year compared to the S&P 500’s 22% and the sector’s 45.1%.

One-Year Price Performance

Industry’s Current Valuation

Based on the forward 12-month price-to-earnings ratio, the industry is currently trading at 25.67X compared to the S&P 500 and the sector’s 19.6X and 24.04X, respectively. Over the past five years, the industry has traded as high as 44.41X and as low as 9.35X.

4 Electronics Semiconductor Stocks to Watch

Cirrus Logic: This Austin, TX-headquartered company is gaining momentum across its audio and haptic solutions, as well as its advanced power and battery-related technologies. Cirrus Logic is increasing its focus on next-generation technology like wearables, gaming and AR/VR, which is expected to fuel its growth. The company has seen a 4% drop in the past year, but the Zacks Consensus Estimate for its fiscal 2024 earnings has moved up by 0.4% to $5.26 per share in the past 60 days.

Price and Consensus: CRUS