In this article, we discuss the 5 best semiconductor stocks to invest in right now. If you want to read our detailed analysis of these stocks, go directly to the 12 Best Semiconductor Stocks To Invest In Right Now.
5. Advanced Micro Devices, Inc. (NASDAQ: AMD)
Number of Hedge Fund Holders: 62
California-based chipmaker Advanced Micro Devices, Inc. (NASDAQ: AMD) ranks 5th on the list of 12 best semiconductor stocks to invest in right now. In the second quarter of 2021, Advanced Micro Devices, Inc.’s (NASDAQ: AMD) global market share jumped 22.5% for CPUs for notebook PCs and servers, up from 18.3% in the previous year.
Shares of Advanced Micro Devices, Inc. (NASDAQ: AMD) increased 3.7% following bullish sentiments from Bank of America Securities analyst Vivek Arya on August 13. The key aspect of Advanced Micro Devices, Inc. (NASDAQ: AMD), according to the analyst, is the company’s gross margin outlook, which he forecasted to reach 48% in 2021 and up to 50% over the next two years. On August 9, Advanced Micro Devices, Inc. (NASDAQ: AMD) was upgraded from Underperform to Market Perform at BMO Capital, with a price target of $110 per share, up from $80.
The company has a market cap of $134 billion. Advanced Micro Devices, Inc. (NASDAQ: AMD) announced $0.63 EPS in the second quarter of 2021, topping estimates by $0.09. The company’s second-quarter revenue increased by 99% year over year to $3.85 billion, owing to the growing demand for Ryzen desktop and notebook processors which accounted for $2.25 billion of the company’s total revenue. The stock has gained 29% in the previous month.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Advanced Micro Devices, Inc. (NASDAQ: AMD) with 25 million shares worth more than $1.9 billion.
4. QUALCOMM Incorporated (NASDAQ: QCOM)
Number of Hedge Fund Holders: 73
QUALCOMM Incorporated (NASDAQ: QCOM) is a chipmaker based in California that ranks 4th on the list of 12 best semiconductor stocks to invest in right now. The company was founded in 1985 and markets CPUs, Bluetooth, Wi-Fi, contemporary RF systems, AI, and 5G technologies globally. Currently, QUALCOMM Incorporated (NASDAQ: QCOM) pays an annualized dividend of $2.72 per share and offers a 1.83% dividend yield.
On August 12, Canaccord analyst T. Michael Walkley kept a Buy rating on QUALCOMM Incorporated (NASDAQ: QCOM) and increased the firm’s price target to $225 per share from the previous $200, citing the chipmaker’s strong position in the semiconductor market. The stock has gained 14% in the past three months.
The company has a market cap of $167 billion. On July 28, the shares of QUALCOMM Incorporated (NASDAQ: QCOM) rose 3% in after-hours trading after the company reported fiscal third-quarter earnings that beat analyst expectations, owing to IoT and the continuing 5G smartphone transition. The company reported an EPS of $1.92, beating estimates by $0.24. The company’s revenue grew 3% year over year to $8 billion and beat revenue estimates by $431.76 million.
Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in QUALCOMM Incorporated (NASDAQ: QCOM) with 364,670 shares worth more than $52.1 million.
In its Q1 2021 investor letter, ClearBridge Investments mentioned QUALCOMM Incorporated (NASDAQ: QCOM) and shared their insights on the company. Here is what the fund said:
“Within IT, we have also increased exposure to a cyclical semiconductor industry currently working through a severe supply shortage due to several years of capacity reductions, COVID-19 shutdowns, and one-off production delays as well as demand resilience in areas like autos and smartphones. The main risk for semiconductors is short-term revenue pressure until capacity catches up with demand, which hurts wireless chipmaker Qualcomm. Looking past current constraints, we expect the industry to see a strong second half and solid growth in 2022.”
3. Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM)
Number of Hedge Fund Holders: 76
Chip giant Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) ranks 3rd on the list of 12 best semiconductor stocks to invest in right now. Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) is a semiconductor foundry that produces chips for other chipmakers and consumer electronics manufacturers. The company currently pays an annualized dividend of $1.78 per share and offers a dividend yield of 1.54%.
Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) stock surged 2.6% on April 1, following the firm’s announcement of a $100 billion-facility expansion in the next three years to increase its global manufacturing capacity. Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) is on schedule to begin commercial production in its $12 billion fabrication facility in Arizona by 2024. The Taiwanese semiconductor company is also considering establishing manufacturing facilities in Germany and Japan. The stock has gained 48% in the past twelve months and shares have increased 6%, year to date.
On July 13, Needham maintained a Buy rating on Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) and increased the firm’s price target to $138 per share from the previous $135.
The company has a market cap of $598 billion. In the second quarter of 2021, Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) reported an EPS of $0.93. The company’s second-quarter revenue grew 28% year over year to $13.29 billion, owing to the high demand for high-performance computing (HPC) products and automotive chipsets.
At the end of the first quarter of 2021, 76 hedge funds in the database of Insider Monkey held stakes worth $10.8 billion in Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM), up from 72 in the preceding quarter worth $11.8 billion.
In its Q1 2021 investor letter, Wedgewood Partners mentioned Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) and shared their insights on the company. Here is what the fund said:
“We initiated a new position in Taiwan Semiconductor Manufacturing, the largest contract manufacturer of logic semiconductors in the world. The Company has invested prodigious amounts of capital ($17 billion in 2020 alone and as much as $28 billion this year) over the past several years, at returns that suggest to us a very steep and sustainable competitive advantage. The Company has a very long runway to grow its business at a double-digit rate, driven by several favorable industries and company-specific trends including semiconductor architectural design changes, increasing manufacturing process complexity, and the proliferation of more logic semiconductors in more devices.
With over 50% market share, more than 3X that of its next largest competitor, Samsung, the Company dominates the contract foundry industry for logic semiconductors (source: Trendforce). Taiwan Semi has erected a formidable competitive barrier with its manufacturing capacity, as the Company carries over $150 billion in gross PPE (property, plant, and equipment) on its balance sheet. This would put the Company in the top echelons of invested tangible capital, globally. Further, the Company has committed to a multi-year, $100 billion capital investment program aimed at building out some of the only capacity capable of manufacturing leading-edge, sub 7 nanometers (nm) resolution integrated circuits. While semiconductor cycles are notoriously boom-bust, the Company has already secured enough demand to drive very high utilization rates for this new bleeding-edge capacity much earlier compared to previous capacity rollouts.
There are several reasons for higher sustained utilization this time around. First, integrated circuits have become extremely complex to manufacture. The Company has secured the majority of the precious few extreme ultraviolet (EUV) tools that enable the manufacture at resolutions that are substantially smaller than the wavelength of light. The Company has invested in and works very closely (on-site) with EUV tool makers to develop this technology. As a result, there is less available capacity from competitors as compared to previous cycles. Second, due to this complexity, chip developers are radically changing their
architectural designs, pushing more demand to the likes of Taiwan Semi that would otherwise be kept in-house. For example, one large customer, AMD, has had a lot of success taking CPU market share from Intel by architecting chips that have disaggregated several functions into smaller dies. Intel has recently launched a similar architectural change, but it will require it to utilize the Company’s sub-7nm capabilities, as Intel does not yet have an economic way to produce these nodes, in-house. Third, the overall demand for more computing power continues to grow as applications related to artificial intelligence require this, and the availability of hardware instances via public cloud providers enables individuals to access a couple, a dozen, or even hundreds of processors at once. This is vastly different compared to the user-PC-server dynamic of previous cycles. Last, as has been widely reported, older, “trailing node” foundry capacity has been in short supply. These shortages have little to do with the Company’s leading-edge investments right now, as less than 40% of their revenues are derived from nodes larger than 28nm. However, we expect their current leading edge to eventually become “trailing-node.” As these smaller nodes proliferate over time, we expect fewer chip manufacturers will be capable of generating manufacturing yields that justify the capital investment, driving up the long-term utilization and pricing power of the Company’s installed capacity.
Over the next several years, we expect Taiwan Semi to generate percentages of compounded revenue growth in the mid-teens along with higher margins and returns, driven by their scarce capacity in leading-edge logic manufacturing. Though the stock trades at a slight premium to the market, we think it is much more reasonable compared to where it traded earlier this year. In fact, the stock briefly went through a bear market earlier this year – after which we began purchasing shares. As the market might periodically serve up shares due to cycle-ending fears, we will look to add to our holding as the Company should be able to sustain superior growth and returns longer than previous cycles.”
2. NVIDIA Corporation (NASDAQ: NVDA)
Number of Hedge Fund Holders: 80
California-based chipmaker NVIDIA Corporation (NASDAQ: NVDA) ranks 2nd on the list of 12 best semiconductor stocks to invest in right now. The company sells graphic cards for gaming and high-performance computers used in data centers and cryptocurrency mining. NVIDIA Corporation (NASDAQ: NVDA) also develops microchips for automotive platforms used in infotainment systems and cloud computing. The company pays an annualized dividend of $0.16 per share and offers a dividend yield of 0.08%.
On August 4, Rosenblatt analyst Hans Mosesmann maintained a Buy rating on NVIDIA Corporation (NASDAQ: NVDA) and raised the firm’s price target to $250 per share from $200, implying earnings power of more than $6.00 per share in FY24. Shares of NVIDIA Corporation (NASDAQ: NVDA) jumped 2.2% following analyst’s bullish sentiment.
The company has a market cap of $503 billion. In the first quarter of 2021, NVIDIA Corporation (NASDAQ: NVDA) reported an EPS of $0.92, beating estimates by $0.09. The company’s revenue grew 84% year over year to $5.66 billion, beating revenue estimates by $252.24 million. The stock has gained 55%, year to date.
At the end of the first quarter of 2021, 30 hedge funds in the database of Insider Monkey held stakes worth $6.20 billion in NVIDIA Corporation (NASDAQ: NVDA), down from 88 in the previous quarter worth $8.69 billion.
In its Q2 2021 investor letter, Vulcan Value Partners mentioned NVIDIA Corporation (NASDAQ: NVDA) and discussed its stance on the firm. Here is what the fund said:
“NVIDIA Corp. was a material contributor during the quarter. NVIDIA’s products are at the intersection of a number of important computing trends including the movement to the Cloud, artificial intelligence, autonomous vehicles, edge computing, gaming, and more. The company continues to execute well, and its value continues to compound rapidly.”
1. Intel Corporation (NASDAQ: INTC)
Number of Hedge Fund Holders: 83
Topping the list of 12 best semiconductor stocks to invest in right now is American chipmaker Intel Corporation (NASDAQ: INTC). The California-based semiconductor company sells processors, chipsets, graphics, storage, wireless, and ethernet products worldwide. Starting April 2021, Intel Corporation (NASDAQ: INTC) is broadening its cutting-edge technology by partnering with MILA, a Montreal-based AI research institute, to develop and use artificial intelligence technologies for improving drug discovery. Intel Corporation (NASDAQ: INTC) currently pays an annualized dividend of $1.39 per share and offers a dividend yield of 2.60%.
In July, The Wall Street Journal reported that Intel Corporation (NASDAQ: INTC) was in talks to buy California-based chip foundry GlobalFoundries for $30 billion, which would be the chipmaker’s largest acquisition, if it goes through. On July 27, Needham analyst Quinn Bolton kept a Buy rating on Intel Corporation (NASDAQ: INTC) with a $70 price target. Shares of Intel Corporation (NASDAQ: INTC) jumped 7%, year to date.
The company has a market cap of $217 billion. In the second quarter of 2021, Intel Corporation (NASDAQ: INTC) reported an EPS of $1.24, beating estimates by $0.19. The company’s second-quarter revenue came in at $18.5 billion, up 2% year over year.
At the end of the first quarter of 2021, 30 hedge funds in the database of Insider Monkey held stakes worth $7.61 billion in Intel Corporation (NASDAQ: INTC), up from 72 in the previous quarter worth $5.57 billion.
In its Q1 2021 investor letter, Alger Spectra Fund mentioned Intel Corporation (NASDAQ: INTC) and shared their insights on the company. Here is what the fund said:
“Short exposure to Intel also detracted from performance. Intel designs and manufactures semiconductors for the computing and communications industries. Intel’s proprietary intellectual strength and manufacturing prowess versus the competition is
deteriorating, which is causing the company to lose market share and profit opportunities. The short position detracted from portfolio returns as the share price reacted positively to the announcement of Pat Gelsinger being hired as chief executive officer, a stronger-than-anticipated quarterly earnings report driven by unusually robust PC sales that we believe are unsustainable and the unveiling of “Intel Unleashed,” a new long-term program to help improve manufacturing and spur innovation. This program involves opening two fabrication plants in Arizona, which confirms Intel’s commitment to continue as an integrated design manufacturer. Importantly, Intel continues to experience issues with its next-generation server chips which are disadvantaging Intel versus the competition.”
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