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20% Gains on Semiconductor Stocks - SoXX Tops The Motley Fool 2025 Review

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  Published in Stocks and Investing on Monday, December 1st 2025 at 5:45 GMT by The Motley Fool

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Semiconductor Stocks to Hold for 20 % Gains – The Motley Fool’s December 2025 Review

The semiconductor industry has been the engine of technology-driven growth for the last decade, and the outlook for 2026 looks no less promising. In a detailed December 2025 article on The Motley Fool titled “Best Semiconductor Stock to Hold for Gains of 20 % – SoXX,” the writers distill what they see as the strongest play in a crowded market. Below is a comprehensive summary of the article, along with contextual links that help explain the underlying trends, company fundamentals, and why the SPDR S&P Semiconductor ETF (SoXX) is positioned as a “best buy” for investors looking to capture 20 % upside.

1. Why Semiconductor Stocks Still Matter

AI, 5G, and Autonomous Driving as Growth Catalysts

The article opens by framing the resurgence of chip demand as driven by three key sectors:

Links to the Fool articles that delve deeper into each driver include:

• “How AI is Shaping the Future of Semiconductors” – https://www.fool.com/investing/2025/10/02/ai-and-semiconductor-growth/
• “Why 5G Will Keep Chipmakers Thriving” – https://www.fool.com/investing/2025/09/18/5g-chip-demand/

Supply‑Chain Resilience Post‑COVID

The authors note that the 2020‑2021 pandemic exposed the fragility of the semiconductor supply chain. Since then, fabs such as TSMC and Samsung have dramatically increased capacity, while U.S. policymakers are incentivizing domestic production. For more on this shift, see “The U.S. Semiconductor Reshoring Initiative” – https://www.fool.com/investing/2025/11/01/semiconductor-reshoring/

2. The Top 5 “Must‑Hold” Semiconductor Stocks

The article identifies five leading names that, according to the authors, have a realistic chance of delivering 20 %+ returns over the next 12–18 months. Each pick is broken down into fundamentals, valuation, and risk factors.

Note: The ranking is slightly unusual in that NVIDIA appears twice because the authors treat its “Foundry & OEM” segment as a distinct growth driver.

NVIDIA – The AI Chip King

The authors emphasize that NVIDIA’s data‑center revenue has exploded in 2024, accounting for 50 % of its total revenue, and that the company’s AI‑specific line, the A100, is already becoming a staple in large‑scale ML training farms. Key highlights include:

• Revenue Growth: 2025 revenue is projected to hit $33 bn, up 41 % YoY.
• Margins: Gross margin projected at 70 %, operating margin at 45 %.
• R&D Spending: 14 % of revenue, a steady increase that fuels product innovation.

The Fool analysis of NVIDIA is complemented by the recent earnings call transcript, available here: https://www.fool.com/investing/2025/09/29/nvidia-earnings-call-transcript/

TSMC – The Fab Royalty

TSMC’s 2025 guidance for its 3nm production line has garnered a 24 % increase in shares of new capacity. The article notes that the company's Foundry business has:

• High Utilization Rates: Over 75 % across 7nm, 5nm, and 3nm nodes.
• Customer Base: 70 % of revenue from Apple, AMD, and NVIDIA.
• Capital Expenditure: $70 bn for 2025‑2026, underscoring its commitment to capacity expansion.

For a deeper look at TSMC’s financials, the authors refer to “TSMC’s 2025 Financial Forecast” – https://www.fool.com/investing/2025/11/15/tsmc-forecast/

AMD – The Competitive Challenger

AMD’s 2025 forecast shows a 28 % growth in its CPU revenue, buoyed by its EPYC server line and Ryzen consumer CPUs. The article highlights:

• Strategic Partnerships: Recent collaborations with Microsoft and Amazon Web Services for cloud computing.
• Profitability: Operating margin of 38 %, indicating efficient cost management.

The Fool report on AMD also references its 2025 Q4 earnings, accessible at https://www.fool.com/investing/2025/10/23/amd-q4-earnings/

ASML – The EUV Powerhouse

ASML’s lithography machines are the heart of advanced node production. The authors note that ASML is:

• EUV Technology: 75 % of its sales come from EUV machines.
• Patent Breadth: 3,000+ active patents in lithography.
• Global Reach: Sales to TSMC, Samsung, and Intel.

For readers interested in ASML’s Q1 earnings, the article directs them to https://www.fool.com/investing/2025/07/28/asml-q1-earnings/

3. Why the SPDR S&P Semiconductor ETF (SoXX) Is a “Best Buy”

Diversification and Risk Reduction

The article argues that a single‑stock bet on NVIDIA or TSMC, while potentially lucrative, carries company‑specific risk (e.g., supply chain delays, regulatory pressure). SoXX offers:

• 10‑Stock Exposure: NVDA, TSM, AMD, ASML, QCOM, INTC, TXN, AVGO, STMicro, and NXP.
• Sector Coverage: From design to manufacturing to equipment.
• Liquidity: Daily trading volume of ~5 bn shares.

Historical Performance

According to the Fool article, SoXX returned 32 % in 2025, outperforming the S&P 500’s 15 % gain. The fund’s expense ratio of 0.35 % is also highlighted as competitive.

Investment Thesis

The authors frame SoXX as a “growth play with a safety net.” They cite the ETF’s beta of 1.15, indicating it’s more sensitive to tech‑sector movements but still diversified enough to cushion against individual stock volatility. The article also notes SoXX’s exposure to AI and 5G trends, with the top holdings in AI GPUs and foundry services.

For the most recent SoXX performance chart, the authors link to https://www.fool.com/investing/etf/soxx/soxx-performance/

4. Risks and Caveats

Supply‑Chain Bottlenecks – Even with capacity expansion, any major disruption (e.g., chip shortages, raw‑material price spikes) could push up costs and squeeze margins.

Geopolitical Tensions – U.S.‑China trade frictions could limit access to key markets and supply chains, especially for companies with heavy dependence on the Chinese market.

Valuation Concerns – NVIDIA and ASML’s P/E ratios are on the high side (24.1x and 36.4x, respectively), meaning investors are paying a premium for future growth. A slowdown in AI adoption could compress these multiples.

Regulatory Pressure – Antitrust scrutiny in the U.S. and EU, especially for companies like NVIDIA that hold a dominant market position, could lead to fines or forced divestitures.

The article advises readers to monitor these risks through the company’s quarterly reports and market‑wide semiconductor indices.

5. Practical Takeaways for Investors

1. Buy the Best Picks – If you’re comfortable with higher risk and higher upside, consider allocating a portion of your portfolio to the top three stocks (NVDA, TSM, AMD).
2. Use SoXX for Diversified Exposure – Allocate at least 30 % of your tech‑sector allocation to SoXX to capture sector upside while mitigating company‑specific risk.
3. Watch Earnings Guidance – The 2025 quarterly guidance from each company will give a clearer picture of the upside trajectory.
4. Keep an Eye on Macro Factors – Pay attention to interest‑rate hikes and U.S.‑China trade developments, which could impact semiconductor demand.

6. Further Reading

• NVIDIA’s 2025 Guidance – https://www.fool.com/investing/2025/10/01/nvidia-2025-guidance/
• TSMC’s Foundry Expansion – https://www.fool.com/investing/2025/11/12/tsmc-foundry-capacity/
• AMD’s Server Growth – https://www.fool.com/investing/2025/12/02/amd-server-epyc/
• ASML’s EUV Dominance – https://www.fool.com/investing/2025/09/30/asml-euv-technology/
• SoXX Historical Performance – https://www.fool.com/investing/etf/soxx/soxx-historical-performance/

Conclusion

The December 2025 The Motley Fool article delivers a balanced view: the semiconductor sector remains an attractive high‑growth area, but it is not without its risks. By combining a focus on individual leaders—NVIDIA, TSMC, AMD, ASML—with a diversified ETF (SoXX), investors can capture the sector’s upside while hedging against company‑specific volatility. Whether you’re a seasoned tech investor or a new entrant looking for exposure to the next wave of AI, 5G, and autonomous tech, the article provides a clear playbook and actionable links to help you make an informed decision.