Vishay Intertechnology valued at $2.6 billion market capitalization 
VSH We manufacture and supply discrete semiconductors and passive electronic components in Asia, Europe and America. Its product portfolio includes diodes, power integrated circuits, power modules, and more. Vishay serves companies in multiple sectors including industrial, computing, automotive, consumer, communications, military, aerospace, and healthcare.
VSH stock has significantly underperformed the broader market over the past 20 years. Since December 2006, tech stocks have returned less than 70% to shareholders, even after dividend reinvestment. In comparison, the S&P 500 index 
SPX It returned more than 600% to investors during this period.
However, past returns don’t really matter to current or prospective investors, so let’s take a look at whether VSH stock should be part of your stock portfolio now.
Vishay survives semiconductor downcycle
In the third quarter of 2024, Vishay reported revenue of $735.4 million, flat year-over-year. Although sales growth is slow, Vishay emphasized that the company is reducing inventory due to weak industrial demand.
But Vishay is positioning itself for future growth based on its 3.0 strategy, where it plans to meet its financial goals at lower costs, and the growing demand for artificial intelligence (AI) servers, especially in Asia. . The company’s Opto products are experiencing strong demand in China, and the company will benefit from larger orders in the smart grid infrastructure, aerospace and defense sectors.
Amid the recent semiconductor downturn, Vishay has focused on cash flow and profitability and has invested in expanding its manufacturing capacity and product portfolio. In addition, Vishay is gaining momentum in Asia, helping to offset weakness in Europe.
How Nvidia Blackwell could benefit Vishay stock
In a recent note, TF International Securities analyst Ming-Chi Kuo named Vishay as a “major hidden winner” due to strong demand for NVIDIA. 
NVDA blackwell chips. Kuo noted that Vishay was replaced by Infineon. 
Ifny As a supplier of Nvidia’s graphics cards, which are scheduled for mass production next year, VSH is a major supplier to the $3 trillion chip giant.
Vishay has already secured orders from Nvidia, which should significantly increase revenue. In fact, demand for Nvidia’s AI products could account for at least one-fifth of the company’s sales by 2025.
Is Vishay stock undervalued?
There are currently only two analysts tracking VSH stock, and their opinions are divided, with one recommending a “strong buy” and the other recommending a “moderate sell.” The average price target for VSH stock is $21, implying about 11% upside potential from current levels.
Mr. Vishay has successfully navigated an uncertain and difficult macroeconomic environment. A focus on growth markets such as AI, electric vehicles and smart grid infrastructure should lead to higher sales and cash flow.
Analysts tracking tech stocks expect adjusted earnings per share to decline from $2.44 in 2023 to $0.55 in 2024. However, the company’s earnings are expected to expand to $1.75 per share in 2026. Therefore, considering VSH stock’s 10.5 times forward earnings, it’s fair to say it’s worth a lot. If you can increase your profit margin over time.
On the date of publication, Aditya Raghunath did not have any positions (directly or indirectly) in any securities mentioned in this article. All information and data in this article is for informational purposes only. For more information, please see the Barchart Disclosure Policy here.
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