Technology stocks made a solid comeback on the market to begin 2023 after a terrible time over the past year. The Nasdaq-100 Technology Sector index clocked 21% gains so far this year on the back of cooling inflation and the possibility of a potential bull market.

This potentially emerging tech rally rubbed off positively on shares of Skyworks Solutions (SWKS 2.08%), a chipmaker that is reliant on smartphone suppliers, especially Apple (AAPL 0.51%), for a major chunk of its revenue. Skyworks stock is up close to 22% this year, handsomely crushing the broader market in 2023. It wouldn't be surprising to see the stock head higher as the year progresses.

More importantly, Skyworks is a screaming buy despite its solid rally this year. Let's look at the reasons why investors may want to buy this chipmaker's stock hand over fist right now.

Looking past Skyworks Solutions' near-term challenges

Trading at 14.5 times trailing earnings and 11 times forward earnings, Skyworks stock looks like a steal right now, especially considering that its fortunes are expected to turn around later in the year.

IDC estimates that smartphone sales were down 11.3% in 2022 to 1.2 billion units. The fourth quarter of 2022 was especially tough for smartphone OEMs (original equipment manufacturers) as shipments plunged 18.3% over the prior-year period. Not surprisingly, Skyworks' forecast for the first quarter of fiscal 2023 (which ended in December 2022) was a poor one.

The company expects $1.32 billion in revenue for the previous quarter, which would translate into a 12.6% decline over the year-ago period. Earnings are expected to drop to $2.59 per share from $3.14 per share in the prior-year period. For fiscal 2023, analysts anticipate Skyworks' top line to contract 7.2% to $5.09 billion, while earnings could drop to $9.82 per share from $11.24 per share in fiscal 2022.

The mobile business accounts for 64% of Skyworks' top line, which explains why the chipmaker issued a tepid forecast and Wall Street isn't upbeat about its prospects in the current fiscal year. However, IDC expects the global smartphone market to stage a recovery in 2023 with an estimated increase of 2.8% in shipments this year. More specifically, the market is expected to start recovering in the middle of 2023 and grow in the second half.

Apple's fortunes are going to play a major role in Skyworks' turnaround. That's because the iPhone maker produced 58% of the chipmaker's revenue last fiscal year. IDC expects shipments of iPhones will increase to 233.5 million units in 2023. That would be an improvement over the 226 million devices that Apple shipped in 2022.

Moreover, the growing adoption of 5G smartphones should be another catalyst for Skyworks. It is estimated that 5G smartphones could account for 69% of overall smartphone sales this year, up from 52% in 2022. As 5G smartphones carry significantly more radio frequency (RF) chips, which Skyworks sells, the increase in sales of these devices should give a lift to the chipmaker's business.

It also helps that Skyworks' largest customer, Apple, is the dominant force in 5G smartphones, as it controls nearly a third of this space. Considering that Apple is sitting on a lot of room for growth in the smartphone segment, especially in emerging markets, Skyworks' largest customer could turn out to be a solid long-term catalyst.

The big picture is positive

The smartphone market is facing challenging times right now, but they are unlikely to last forever. Ericsson estimates that global 5G subscriptions could jump to 5 billion by 2028 from 1 billion at the end of 2022. So Skyworks' addressable market is expected to grow substantially in the long run, and the company's relationships with major smartphone OEMs that use its 5G platform should help it tap that fast-growing market.

All this explains why Skyworks' earnings are expected to increase at an annual rate of 15% for the next five years, an improvement over the 12% annual growth it clocked in the last five. Throw in the fact that Skyworks sports an attractive dividend yield of 2.25% and a low payout ratio of 22%, and investors have another good reason to buy the stock. The chipmaker has been increasing its dividend annually for the past eight years, and the potential earnings growth suggests that the payout could head higher.

In all, it looks like investors are getting a good deal on this semiconductor stock right now, and they may want to grab it before it heads higher.