Semiconductor Stocks Continue to Shine
Semiconductor stocks have been soaring higher throughout 2021 given unprecedented demand and a global chip shortage, with the industry expected to remain hot into next year and beyond. When you stop to think about how these companies fit into the overall tech sector, it’s easy to understand why investors continue scooping up shares. These tiny devices power so many different types of technology today and play an absolutely crucial role in the world’s economy.
Whether it's 5G networks, data centers, electric vehicles, artificial intelligence, consumer electronics, or even infrastructure, it’s safe to say that semiconductors offer exposure to some of the most exciting end markets today. It makes sense to consider any dips in the leading semi stocks as buying opportunities given how long it’s going to take for the chip industry to catch up with demand, and there are several names worth checking out at this time.
That’s why we’ve put together an overview of 3 chip stocks to buy now. Let’s take a closer look below.
It’s fair to say that Micron Technology has been one of the rare underperformers in the semiconductor space during 2021, although the stock has still rallied over 14% year-to-date. It’s worth a look given the recent change in character that has seen the stock break out of a downtrend and reclaim all of the major moving averages. The company is a manufacturer of semiconductor memory products like DRAM and NAND flash memory, along with image sensors, which means that Micron’s
chips are directly connected to the rise of data centers. The company should also benefit from the demand for 5G-enabled devices, personal computing, and graphics as technology continues to become further integrated into our daily lives.
Micron also stands out as a potential bargain at its current valuation, given that it’s trading at a forward P/E ratio of 9.77. The company recently reported Q4 revenue growth of 37% to $8.3 billion, which was helped by record NAND and embedded sales during the quarter. The bottom line here is that if you are interested in a quality semiconductor stock that isn't stretched and is trading at a much more affordable valuation than its peers, Micron is worth a look.
Looking at semiconductor equipment manufacturing companies like Lam Research also makes a lot of sense, given how many companies are spending big to improve their production capabilities. As a supplier of wafer fabrication equipment and services that are critical in the production of almost every type of semiconductor, Lam Research has reported quarter after quarter of positive earnings results in 2021. Most recently, the company posted non-GAAP EPS of $8.36 in Q1, an increase of over 45% year-over-year. This is all the more impressive considering that global supply chain constraints are still in play.
It’s also worth mentioning that Lam Research's etch and deposition tools help chipmakers with creating more advanced chips, which means the company is at the forefront of semiconductor innovation. Considering how industries like AI, 5G, and cloud computing are in their early innings, it’s safe to say that Lam Research
will benefit from plenty of demand as these technologies are improved over the years. With the stock breaking out to new all-time highs following a long period of consolidation, there’s a good chance this is a semi stock with room to run in the coming weeks.
Finally, we have Qualcomm, a designer and manufacturer of semiconductors for mobile phones and commercial wireless applications. This company’s business model is very attractive, as the company receives royalty and licensing revenue from its huge intellectual property portfolio that is used by almost every major wireless device manufacturer. If you’re a big believer in the growth of the smartphone industry, this is the semi stock to own, as those royalties should only increase as more people gain access to these handheld mobile devices.
The stock recently jumped to new all-time highs
following a strong investor day, during which the company’s management laid out a game plan for becoming less reliant on Apple for earnings growth. Qualcomm also recently posted very strong Q4 earnings, including revenue growth of 43% year-over-year to $9.3 billion. The quarter capped off an incredibly impressive year for the semi company, as Qualcomm delivered record GAAP and Non-GAAP Fiscal Year results amidst massive supply chain issues.
Before you consider Lam Research, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Lam Research wasn't on the list.
While Lam Research currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.
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