Over the past month, many companies across the chip supply-chain ecosystem have witnessed heavy selling pressure as investors reassessed valuations and near-term growth expectations. One of the biggest reasons behind the pullback has been rising concerns that the enormous artificial intelligence (AI) spending by hyperscalers may take longer than expected to generate meaningful financial returns. While companies such as Microsoft, Amazon, Alphabet and Meta continue to invest billions of dollars in AI infrastructure, investors have become cautious about whether these investments can justify current spending levels in the near term.
Profit booking has also weighed on semiconductor-related stocks. Many companies supplying equipment, testing solutions, advanced packaging and connectivity products delivered outstanding gains during the opening months of 2026. This rapid ascent stretched valuations to historic multiples, prompting investors to lock in gains and de-risk portfolios.
At the same time, renewed geopolitical tensions, including the recent U.S.-Iran military conflict, have increased uncertainty across global markets. Investors have shifted toward defensive sectors, leading to broad-based selling in technology stocks.
As a result, shares of several leading chip supply-chain companies, including Teradyne, Inc. TER, FormFactor, Inc. FORM, Amkor Technology, Inc. AMKR and Credo Technology Group Holding Ltd. CRDO, have dropped nearly 30% over the past month and now trade roughly 35% below their respective 52-week highs. Their valuation multiples have also fallen well below the peak levels seen over the past year, creating an attractive entry point for investors as the AI-driven semiconductor expansion is likely to continue over the next few years at least.
One-Month Price Return Performance
Image Source: Zacks Investment Research
These stocks have a favorable combination of a Growth Score of A or B and a Zacks Rank of 1 (Strong Buy) or 2 (Buy), offering solid investment opportunities. These have also witnessed upward earnings estimate revisions for the current fiscal, indicating bullish analysts’ views about their long-term prospects.
FORM: Critical Player in Advanced Chip Manufacturing
FormFactor plays an essential role in semiconductor production by supplying advanced probe cards and measurement solutions used during wafer testing. As chip manufacturers move toward smaller process nodes and more advanced packaging technologies, precision testing becomes increasingly important. In the first quarter of 2026, the company’s revenues rose 32% year over year, while non-GAAP earnings per share (EPS) jumped 143%.
FormFactor is well-positioned to benefit from rising demand for high-bandwidth memory (HBM), advanced logic chips and AI processors. These products require significantly more testing than traditional semiconductors, creating favorable industry trends for the company. As leading foundries and memory manufacturers continue investing in next-generation production capacity, FormFactor stands to benefit from higher testing intensity across the semiconductor manufacturing process.
Combined with lower valuation multiples following the recent correction, FormFactor appears well-positioned for a recovery once market sentiment improves. The company's forward 12-month price-to-earnings (P/E) valuation multiple of 41.93 remains well below the one-year high of 102.72. At the closing price of $105.57 as of July 17, FORM stock trades nearly 34% lower than its 52-week high of $160.27.
The Zacks Consensus Estimate for 2026 earnings has been revised upward over the past 60 days and indicates a year-over-year increase of approximately 85%. Currently, FormFactor sports a Zacks Rank of 1 and has a Growth Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
FormFactor, Inc. Price and Consensus
FormFactor, Inc. price-consensus-chart | FormFactor, Inc. Quote
CRDO: AI Networking Demand Supports Long-Term Growth
Credo Technology has emerged as an important supplier of high-speed connectivity solutions used inside AI data centers. As AI clusters become larger and more powerful, demand for energy-efficient optical connectivity and high-speed data transmission continues to increase. In the last reported financial results for the fourth quarter of fiscal 2026, Credo Technology’s revenues surged 157% year over year, while non-GAAP EPS jumped 231%.
The company supplies active electrical cables, optical digital signal processors and connectivity solutions that help improve data transfer while reducing power consumption. These products are becoming increasingly important as hyperscalers build next-generation AI infrastructure. As artificial intelligence models expand, the sheer volume of data moving between server racks threatens to overwhelm traditional infrastructure, creating a massive tailwind for Credo Technology’s energy-efficient optical and electrical link products.
The company's forward 12-month P/E valuation multiple of 30.96 is significantly lower than the one-year high of 132.72. At the closing price of $202.68 as of July 17, CRDO stock trades nearly 34% lower than its 52-week high of $308.67.
The Zacks Consensus Estimate for fiscal 2027 earnings has been revised upward over the past 30 days and indicates a year-over-year surge of 73%. Currently, Credo Technology sports a Zacks Rank #1 and has a Growth Score of B.
Credo Technology Group Holding Ltd. Price and Consensus
Credo Technology Group Holding Ltd. price-consensus-chart | Credo Technology Group Holding Ltd. Quote
TER: AI Chip Testing Demand Remains a Long-Term Tailwind
Teradyne is one of the world's leading providers of automated test equipment used by semiconductor manufacturers. As AI processors become increasingly complex and expensive, chipmakers require more sophisticated testing before products reach customers. This directly strengthens Teradyne's long-term demand outlook. In the first quarter of 2026, its revenues and non-GAAP EPS soared 87% and 241%, respectively, year over year.
The company continues to benefit from rising investments in high-performance computing, AI accelerators and advanced memory technologies. Beyond semiconductors, Teradyne is also expanding its presence in industrial automation through collaborative robots, providing another long-term growth opportunity. While near-term spending cycles may fluctuate, the growing complexity of AI chips should continue increasing testing requirements, positioning Teradyne to benefit as semiconductor investments recover.
The company's forward 12-month P/E valuation multiple of 38.01 remains well below the one-year high of 60.35. At the closing price of 322.36 as of July 17, TER stock trades 34% lower than its 52-week high of $487.91.
The Zacks Consensus Estimate for 2026 earnings has been revised upward over the past 30 days and indicates a year-over-year surge of 42%. Currently, Teradyne carries a Zacks Rank #2 and has a Growth Score of A.
Teradyne, Inc. Price and Consensus
Teradyne, Inc. price-consensus-chart | Teradyne, Inc. Quote
AMKR: Advanced Packaging Creates Growth Opportunities
Advanced packaging has become one of the fastest-growing segments within the semiconductor industry, and Amkor Technology remains one of the global leaders in outsourced semiconductor packaging and testing services. The company’s first-quarter 2026 revenues increased more than 27% year over year, while non-GAAP EPS soared 267%.
Amkor Technology is positioned to benefit from AI and high-performance computing packaging demand, with advanced packaging platforms expected to nearly triple in 2026 and two CPU programs targeting high-volume production in the second half of the year. Computing is forecast to grow more than 20% year over year, supporting a sustained mix shift toward higher-value offerings. Amkor Technology’s multi-region buildout across Korea, Vietnam, Arizona and Taiwan, supported by government incentives and customer agreements, underpins its multi-year growth potential.
Following the recent share price correction, AMKR now trades at a much more attractive valuation relative to its long-term growth prospects. The company's forward 12-month P/E valuation multiple of 29.61 is significantly lower than the one-year high of 44.43. At the closing price of $62.94 as of July 17, Amkor Technology stock trades approximately 35% lower than its 52-week high of $96.68.
The Zacks Consensus Estimate for 2026 earnings has been revised upward over the past 60 days and indicates a year-over-year increase of 39%. Currently, Amkor Technology carries a Zacks Rank #2 and has a Growth Score of A.
Amkor Technology, Inc. Price and Consensus
Amkor Technology, Inc. price-consensus-chart | Amkor Technology, Inc. Quote
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FormFactor, Inc. (FORM): Free Stock Analysis Report
Teradyne, Inc. (TER): Free Stock Analysis Report
Amkor Technology, Inc. (AMKR): Free Stock Analysis Report
Credo Technology Group Holding Ltd. (CRDO): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).