Given that it includes three of the 10 largest companies in the world by market capitalization, the semiconductor and chipmaking industry sets a lofty standard for what it means to be an average-sized firm. Similarly, "small" semiconductor companies, or at least those that are smaller than titans like NVIDIA Corp (NASDAQ:NVDA).
Nvidia might still be valued in the hundreds of billions of dollars. Nonetheless, because a few major players have dominated semiconductor news cycles in recent quarters, many of these other companies get overlooked.
Three such firms, Arm Holdings (NASDAQ:ARM), Lam Research Corp (NASDAQ:LRCX) and ASML Holding (AS:ASML), have captivated analyst attention. While NVDA shares have fallen by about 15% year-to-date (YTD) as of March 18, 2025, shares of these other smaller firms have either dipped to a smaller degree or even climbed so far this year, helping them to further stand out for investors willing to look beyond the big names.
Why Now Might Be the Right Time to Buy Arm Stock
Driven by strong sales of its Armv9 AI architecture, Arm reported a record $983 million in total revenue for the most recent quarter, up 19% year-over-year (YOY). The firm also noted strong growth in royalty and licensing revenue as well, as its products continue to see high demand. What’s more, Arm maintained an excellent gross margin of 98.1%, while its operating margin increased to 45% from 43.8% in the prior year period.
Arm has developed a reputation for processors that are highly energy efficient while remaining affordable. This combination is likely to be a key driver of continued sales, particularly as those within and outside of the AI industry seek ways to increase computing power while keeping costs and energy usage down.
Investors may long have shied away from investing in Arm, despite its compelling company profile within the AI space, because of its valuation. Now that shares have dropped by about 7% YTD in a sell-off period, though, the company is presenting investors with new opportunities to buy. To be sure, with a P/E ratio of 156.3, ARM shares are still valued quite high. However, analysts see more than 39% in upside potential as well.
Analysts See 27% Upside for Lam Research Stock—Is It a Buy?
Lam Research occupies a unique space in the semiconductor industry because it develops and supplies the equipment other companies use to build chips. It has become particularly well known for its equipment used in the production of NAND and DRAM memory products, both of which are in increasingly high demand for a wide variety of applications.
The largest share of Lam’s revenue comes from China, where a number of competitors could threaten the company’s dominance going forward. Still, Lam has a distinct advantage because of its strong cash reserves, which were about $5.7 billion as of the end of the December quarter. This allows it to invest heavily in R&D to develop cutting-edge tools like its recently announced atomic layer deposition product, ALTUS Halo.
As of March 18, 17 out of 22 analysts believe Lam has room to grow and have assigned it a Buy rating. The company’s consensus price target is $98.22, with more than 27% upside potential.
ASML’s Lithography Monopoly Gives It a Competitive Edge
At a market cap of $286 billion, ASML is the largest firm on our list and another major player in the development of equipment used to build and service semiconductors. ASML’s lithography equipment is unmatched across the industry, giving it what essentially amounts to a monopoly among high-end chipmaker clients. This may have played a role in ASML’s share price increase of nearly 4% YTD, even amid a brief sell-off scare for some other major semiconductor firms.
Analysts see plenty of room for optimism in ASML’s future, including more than 16% of projected earnings growth and nearly 29% upside potential based on a consensus price target of $937 per share.
Nine out of 11 analysts rated the company and assigned it a Buy. It is worth noting, however, that ASML recently missed on its estimated EPS, coming in at $7.30 when analysts had predicted $7.67. As always, some caution is advised despite the healthy support of analysts across Wall Street.