We recently published an article titled Why These 15 Semiconductor Stocks Have Been Plunging So Far in 2025. In this article, we are going to take a look at where Semtech Corporation (NASDAQ:SMTC) stands against the other semiconductor stocks.

Wall Street has gotten increasingly bearish on semiconductor stocks over the past few months as concerns about the profitability and sustainability of AI have gained traction. This was compounded by DeepSeek at first. The market recovered from that, but as Microsoft started canceling some data center leases and Nvidia failed to beat earnings by stellar margins, sentiment has turned sour again.

AI-related semiconductor stocks, which have been pick-and-shovel plays, are bearing the brunt of the selloffs, as they are the ones sitting on top of a two-year-long rally. This is a cyclical industry, so it’s possible that semiconductor stocks are now shifting into a bearish phase.

You should keep up with these stocks, as they’ve delivered multibagger gains over the past two years. There’s a good chance that the AI narrative recovers from here. And even if it doesn’t, it’s still worth looking into the big losers and the reasons behind their decline.

Methodology

For this article, I screened the worst-performing semiconductor stocks year-to-date.

I will also mention the number of hedge fund investors in these stocks. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

A technician looking at a circuit board of analog semiconductor products.

Semtech Corporation (NASDAQ:SMTC)

Number of Hedge Fund Holders In Q4 2024: 57

Semtech Corporation (NASDAQ:SMTC) sells IoT systems and high-performance semiconductors. It is also a cloud connectivity service provider.

The stock is down significantly so far in 2025 due to Semtech announcing that FY2026 sales for its CopperEdge products would fall below the previously projected $50 million floor.

This was attributed to changes in server rack architecture by a major customer (believed to be Nvidia), which reduced demand for CopperEdge products due to heating issues.

Following the CopperEdge guidance cut, multiple law firms launched securities fraud investigations into Semtech. These investigations allege that the company misrepresented the viability and market potential of its CopperEdge products. In turn, analysts ended up downgrading the stock.

The consensus price target of $67.91 implies 90.86% upside.

Semtech Corporation (NASDAQ:SMTC) stock is down 40.91% year-to-date.

Overall SMTC ranks 6th on our list of the semiconductor stocks that have been plunging so far in 2025. While we acknowledge the potential of SMTC as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SMTC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

 

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Disclosure: None. This article is originally published at Insider Monkey.