Photronics, Inc. (PLAB) is a semiconductor supplier with a compelling valuation and potential upside.

From Yahoo Finance: 2025-06-09 14:24:00

Photronics, Inc. (PLAB) is a semiconductor supplier trading at a compelling valuation, down nearly 50% from early 2024 highs. The company has a $1.14B market cap, with 85% of sales coming from outside the U.S. Despite recent challenges, PLAB remains fundamentally solid with strong free cash flow.

The recent investor pessimism surrounding PLAB is due to its China exposure and the nature of mask demand, which depends on new chip designs rather than chip volume. However, the emerging wave of AI-enabled chips could provide a tailwind for PLAB over the next year. The company has been strategically shifting toward higher-end masks with better margins.

Photronics, Inc. (PLAB) has a free cash flow multiple of just 7.4x, making it an attractive opportunity for value-focused investors. While uncertainties remain, the setup suggests potential upside as demand normalizes. PLAB has actively repurchased shares and remains debt-free with $558M in cash, supporting resilience through industry downturns.

As of the end of the first quarter, 25 hedge fund portfolios held PLAB, up from 23 in the previous quarter. While PLAB presents potential as an investment, some AI stocks may offer greater promise for higher returns with limited downside risk. For investors seeking a cheap AI stock with potential benefits from Trump tariffs and onshoring, further research is recommended.

Read more: Photronics, Inc. (PLAB): A Bull Case Theory