Chip stocks have been all the rage in financial markets ever since the whole AI frenzy started in late 2022.
However, not all chip stocks were made equal.
Despite the hype, a few of them haven’t been able to do all that well in recent months.
But that doesn’t mean they are not worth owning in 2025.
At least, that’s what famed investor Jim Cramer has told us in recent appearances on CNBC.
Here are the top 2 underperforming chip stocks he recommends buying on the recent weakness.
ASML Holding NV (AMS: ASML)
ASML stock has tanked nearly 30% over the past six months but Jim Cramer expects the story moving forward to be a different one.
Part of the reason why this Dutch firm has done poorly in recent months has been the US imposed restrictions on the export of sophisticated chips to China.
But the Mad Money host remains positive on ASML as it’s the world’s largest supplier of the semiconductor industry and the sole provider of extreme ultraviolet (EUV) lithography machines used for manufacturing advanced chips.
“I think ASML is a remarkably great company, and I think you should buy it,” he told his viewers this week.
Plus, President Trump has recently disclosed a desire to “get along with China”.
So, who’s to say the chip export regulations won’t ease against Beijing under his rule?
He did, after all, roll back on plans to raise tariffs on Chinese goods by 60%.
The new US government is now broadly expected to announce a much more accommodative 10% increase in tariffs on China – roughly in line with what he has planned for other countries as well.
Lam Research Corp (NASDAQ: LRCX)
Lam Research is another name Cramer expects will recover this year following a close to 30% hit since July of 2024.
“That stock is so cheap; I want to buy it. We have so many semis in the Charitable Trust but that stock is the cheapest I’ve seen it in a long time,” he said this week on Mad Money.
Lam Research is scheduled to report its second-quarter financial results on January 20th.
The consensus is for it to earn 87 cents a share (up 16% year-on-year) on $4.31 billion in revenue (up 14.6% year-on-year).
The Nasdaq-listed firm stands to benefit from increased spending on dynamic random access memory amidst continued focus on AI applications. A 1.15% dividend yield makes LRCX all the more attractive to own in 2025.
Plus, Lam Research stock is trading at a deep discount considering its forward price-to-earnings multiple of 22 times versus the industry’s 35.
Wall Street currently sees an upside in the semiconductor company to $92 on average indicating potential for a more than 15% gain from current levels.
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