Analysts are Slashing Price Targets of These 10 Semiconductor Stocks

Published July 19, 2022 at 9:22 am EDT Updated September 7, 2026 at 2:19 pm EDT

In this article, we discuss 10 semiconductor stocks that analysts are slashing price targets of.

Semiconductor stocks have been on a downward trend since the start of the year due to concerns related to rising costs, a looming recession, and a slowdown in demand. On top of it, industry experts think that things will get worse before getting better. In a research note issued on July 13, Christopher Danely at Citi has predicted that semiconductor stocks will fall by more than 15% during the second half of the year. These sentiments are shared across the Street as analysts are lowering their estimates and target prices of notable semiconductor stocks like Intel Corporation (NASDAQ:INTC), NVIDIA Corporation (NASDAQ:NVDA), and Micron Technology, Inc. (NASDAQ:MU). Danely thinks that the upcoming decline in semiconductor stocks will be the worst to be recorded in the last ten years. He thinks that “excessive valuation, excessive inventory build, and a recession” are the three key reasons for the downturn.

Semiconductor entities having the highest exposure to the personal computer and smartphone industry will be most vulnerable during this period as the analyst anticipates a fall of 9% YoY in unit sales this year across both categories. Both these industries account for 50% of the demand for semiconductors globally. Meanwhile, other leading industries like artificial intelligence, cloud computing, and electric vehicles make up for the remaining demand. It must be noted that in 2020 and 2021, PC and smartphone demand rocketed as the COVID-19 pandemic resulted in an increased number of people working from home. However, the demand can be seen waning as the world regains a sense of normalcy.

The semiconductor industry is facing pressure from both the demand and the supply side. On one end, there is a slowdown in consumer demand, while on the other hand, there are excess inventories. The chip shortage experienced recently due to supply chain disruptions and labor shortages led to semiconductor companies building up their inventories. However, the slowdown in demand is now forcing companies to offload excess inventory at lower prices, putting the top line and bottom line under pressure.

Furthermore, consumer prices increased at a rate of 9.1% YoY during June 2022. This was higher than anticipated and fueled the expectations that the Federal Reserve would announce another steep increase in benchmark interest rates, forcing investors to stay away from high-growth companies.

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Our Methodology

Let’s take a look at the 10 semiconductor stocks that have observed a downward revision in target price recently. We’ll discuss the possible reasons for the decline in target price to provide readers with a better investment context. The hedge fund sentiment discussed is based on Insider Monkey’s database of 912 elite funds as of Q1 2022.

10. Skyworks Solutions, Inc. (NASDAQ:SWKS)

Number of Hedge Fund Holders: 39

Skyworks Solutions, Inc. (NASDAQ:SWKS) is an Irvine, California-based semiconductor manufacturing company.

On July 12, John Vinh at Keybanc slashed the target price on Skyworks Solutions, Inc. from $160 to $140 and reiterated an Overweight on the stock. He slashed his estimates on several semiconductor stocks and highlighted that a correction is around the corner for the semiconductor industry.

Vinh added that most of the findings were negative during his investigation of the supply chain of the semiconductor industry. The analyst highlighted the lockdowns in China due to COVID-19 during Q2 2022 and the weak demand for PC and smartphones as the key reasons for lowering his estimates. However, he sees strong demand from automobile, industrial, and cloud computing industries in the near future. Vinh also commented that the decline in Skyworks Solutions, Inc.’s (NASDAQ:SWKS) lead times represents excess inventory, and a correction could take place in the second half of 2022.

At the end of the first quarter of 2022, 39 hedge funds reported owning a stake in Skyworks Solutions, Inc..

9. ASML Holding N.V. (NASDAQ:ASML)

Number of Hedge Fund Holders: 46

ASML Holding N.V. (NASDAQ:ASML) is a Dutch semiconductor company that specializes in the development and manufacturing of photolithography systems needed for the production of semiconductor chips. The company operates through 60 locations in 16 countries.

In an investment note issued on July 15, Joe Quatrochi and his team of analysts at Wells Fargo slashed the price target on ASML Holding N.V. by 20% to $600. The analysts anticipate ASML Holding N.V. to be impacted by the decline in spending on wafer fabrication equipment.

In June 2022, Ray Dalio’s Bridgewater Associates initiated a short position of $1 billion in ASML Holding N.V.. The short bet was part of a $10.5 billion bet against European stocks. The biggest hedge fund in the world initiated the short position to capitalize on the slowdown of economic growth in the Eurozone as inflation takes a toll on consumers.

ClearBridge Investments presented its insights on ASML Holding N.V. in its Q1 2022 investor letter. Here’s what the investment management firm said:

“During the quarter, we reduced our semiconductor exposure through the trim of ASML (NASDAQ:ASML) to manage concerns of a slowdown due to the risk of double ordering and potential softness in some consumer end markets. We increased our position in IT services with the purchase of Accenture as we remain optimistic about the long-term growth potential these companies provide, which is underpinned by the compressed digital transformation cycle, rising cloud adoption and growth in data-driven insights.

Despite the market volatility and hyper focus on rising rates, chief information officer surveys continue to forecast resilience in IT budgets this year. Growth in IT spending for 2022 is expected to remain above the 10-year pre-COVID-19 average, according to Morgan Stanley. We believe this is a result of the strong secular underpinnings brought on by digital transformation and businesses focusing on increasing efficiencies through technology.”

Out of the 912 hedge funds in Insider Monkey’s database, 46 funds held a stake in ASML Holding N.V. as of Q1 2022.

8. Lam Research Corporation (NASDAQ:LRCX)

Number of Hedge Fund Holders: 59

Lam Research Corporation (NASDAQ:LRCX) is a California-based manufacturer and supplier of wafer fabrication equipment to the semiconductor industry.

On July 15, Joe Quatrochi and his team of analysts at Wells Fargo lowered the price target on Lam Research Corporation from $525 to $460 and maintained an Equal Weight rating on the stock. The revision in target price has restricted the potential upside to 7.7% only. The team of analysts sees a difficult setup for the semiconductor industry as the earnings results for Q2 2022 start to roll out.

Analysts at Wells Fargo think that the semiconductor industry is undergoing a cyclical correction. Hence, the demand for wafer fabrication equipment and the capital expenditure will be reduced. The investment firm added that it is attempting to catch a fundamental bottom for the industry during this uncertainty.

Vulcan Value Partners shared its outlook on Lam Research Corporation in its Q1 2022 investor letter. Here’s what the firm said:

“Lam Research Corp. designs and manufactures equipment used in the fabrication of semiconductors. Recent supply chain issues have negatively impacted the industry and has resulted in chip shortages. The industry is performing well, exceeding our expectations, and Lam Research’s fundamentals remain strong. The long-term secular drivers of demand and growth in the industry continue to be very powerful. Lam Research is experiencing increasing returns on capital, higher margins, and more stable results.”

Fisher Asset Management is the leading investor in Lam Research Corporation, with a stake worth over $1.02 billion as of Q1 2022.

7. Broadcom Inc. (NASDAQ:AVGO)

Number of Hedge Fund Holders: 71

Broadcom Inc. (NASDAQ:AVGO) is a San Jose, California-based diversified designer, developer, manufacturer, and supplier of semiconductor and infrastructure solutions software.

On June 29, Vivek Arya at Bank of America reiterated a Buy rating on Broadcom Inc. but reduced the target price from $780 to $625. The analyst lowered the target price for Broadcom Inc. due to its exposure in the data center segment. Arya is bullish on the semiconductor industry but expects the growth in capital expenditure of top cloud computing players to decline to 10.5% by 2023. The decline in capital expenditure would hurt the growth of semiconductor companies. Arya also highlighted that in the last two economic recessions, annual growth for semiconductor companies fell to 4% – 5% before rising to the historical average of 25% to 30%.

Broadcom Inc. was mentioned in the Q4 2021 investor letter of ClearBridge Investments. Here’s what the firm said about the company:

“However, ClearBridge portfolio companies are responding by supporting their workforces and showing resilience in adapting and thriving. Semiconductor companies ClearBridge owns and engages with have been successful in advancing vaccinations in their global supply chains. In Malaysia, for example, Broadcom has taken part in PIKAS, a public-private partnership vaccination program focusing on the workforce in critical manufacturing sectors. By the summer of 2021 Broadcom was able to get over 90% of workers in its Penang factory at least one dose of vaccine, and roughly 73% fully vaccinated. Companies in the program also pay the administration cost for vaccinations including cases where the employee is no longer employed by the company before full immunization of the employee.”

Overall, 71 hedge funds held a stake in Broadcom Inc. as of Q1 2022.

6. Applied Materials, Inc. (NASDAQ:AMAT)

Number of Hedge Fund Holders: 74

Applied Materials, Inc. (NASDAQ:AMAT) is a Santa Clara, California-based supplier of equipment, software, and services for the production of semiconductor chips for various industries.

On July 15, Joe Quatrochi and his team of analysts at Wells Fargo lowered the price target on Applied Materials, Inc. from $135 to $110 and maintained an Overweight rating on the stock. The analysts expect the sales of wafer fabrication equipment to decline from $99.2 billion to $96 billion in 2022 and then to $91 billion in 2023. Furthermore, the estimates for Applied Materials, Inc. were cut down by 6% by the investment firm as it waits for Q2 2022 results and July data points.

Applied Materials, Inc. was discussed in the Q4 2021 investor letter of Vulcan Value Partners. Here’s what the firm said:

“Applied Materials, another material contributor for the quarter, provides materials engineering solutions for semiconductor fabrication equipment and manufacturing tools for advanced displays. Similar to Lam Research, Applied Materials is executing well and continuing to experience the tailwinds from consolidation and growth within the industry.”

According to Insider Monkey’s proprietary data, Generation Investment Management is the biggest hedge fund holder of Applied Materials, Inc., with a stake of $560.98 million as of Q1 2022.

Apart from Applied Materials, Inc., stocks like Intel Corporation, NVIDIA Corporation, and Micron Technology, Inc. have also received downward revisions in price targets recently.

5. Intel Corporation (NASDAQ:INTC)

Number of Hedge Fund Holders: 76

Intel Corporation is a semiconductor company that is excelling in the field of cloud computing, data center, the internet of things (IoT), and PC solutions.

The target price of the Santa Clara, California-based company was reduced from $45 to $40 by Blayne Curtis at Barclays on July 11. The analyst reiterated an Underweight rating on Intel Corporation stock. Curtis lowered the target price as he anticipates a 17% dip in Intel Corporation’s production of notebooks this year as compared to a prior forecast of a decline of 12%. The analyst recommends investors stay away from Intel Corporation stock as he believes the downturn has begun. Intel Corporation is set to announce its Q2 2022 results on July 28 with expected revenue and EPS of $17.98 billion and 52 cents, respectively.

Here’s what Baron Funds said about Intel Corporation in its Q1 2022 investor letter:

“Intel’s capital spending process is guided by a process they appropriately named “copy exactly.” This means that they attempt to “copy exactly” what they have already built and attempt to improve tried and true processes iteratively.”

Of the 912 hedge funds in Insider Monkey’s database, 76 funds held a stake in Intel Corporation as of Q1 2022.

4. Micron Technology, Inc. (NASDAQ:MU)

Number of Hedge Fund Holders: 78

Micron Technology, Inc. is an Idaho-based semiconductor company providing memory and storage solutions. The company operates in 17 countries and has a headcount of over 40,000 employees.

On July 1, Harlan Sur and his team at JPMorgan lowered the target price on Micron Technology, Inc. from $96 to $80 and reiterated an Overweight rating on the stock. The analysts shed light on the demand for semiconductor equipment from the cloud computing industry. The team at the investment firm believes that the capital expenditure of cloud data centers would increase by 25% YoY as opposed to a prior estimate of 28% YoY. However, the team expects the pace of growth to slow down to the mid-teens percentage in 2023. Micron Technology, Inc. is down over 35% YTD, and the analyst believes that the company is trading “at or near a trough valuation.”

Here’s what Hazelton Capital Partners said about Micron Technology, Inc. in its Q3 2021 investor letter:

“It’s hard to explain how shares of Micron Technology, manufacture of DRAM and NAND semiconductor chips, can fall during a global chip shortage. In most industries, focusing on demand can give you a clear insight into what lays ahead for a company. Today, the memory and storage chip industry is no different. However, in the past, companies focused on market share led to the reckless build out of chip fabrication plants (FABs), oversupply, falling average selling prices (ASPs) of memory and storage chips, lower margins, and declining cash flows. As the industry consolidated – there are now just 3 major producers of DRAM and 5 on the NAND side – rational behavior among the key players began to take hold as competitors began focusing more on R&D. Currently, chip pricing remains cyclical although less so than in the past and that cyclicality has a long-term upward bias. The ongoing transition to newer and more robust platforms (3D 176-layer NAND & 1-Alpha node DRAM) has provided the memory and storage chip industry with improved supply capacity under its current manufacturing footprint, ultimately pressuring ASPs. Over the past three years, as most of the large platform conversions have already taken place, being able to add more bits per wafer has reached a saturation point. With no major FAB build outs planned in the near-term by competitors Samsung or SK Hynix, constrained supply and flattening cost curves should lead to durable and upward sloping ASPs once the recent volatility from the chip shortage subsides.

Currently Micron Technology trades at just 8x 2022 estimate earnings. MU is expecting growth in both DRAM and NAND not just from the supply of more chips to data centers, artificial intelligence, the auto sector, and mobile devices, but also from greater demand for gigabyte capacity per unit within those segments. With a healthy balance sheet, improving return on invested capital, and expanding cash flows, not only should Micron benefit from improving future earnings but its multiple should also reflect the transition to a flattening cost curve.”

3. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)

Number of Hedge Fund Holders: 81

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is a leader in semiconductor foundry and manufactures around 11,617 products.

Taiwan Semiconductor Manufacturing Company Limited posted its Q2 2022 results on July 14. The company saw its net profit increase by 76.4% YoY to $7.94 billion. This was the highest increase in net profit in the last eight quarters and easily surpassed the consensus estimates of $7.34 billion. Taiwan Semiconductor Manufacturing Company Limited also provided strong guidance for Q3 2022 as it anticipates revenue to be around $19.8 billion to $20.6 billion as opposed to $14.88 billion during the same period last year. Furthermore, the company anticipates full-year revenue growth to be in the mid-30s percentage as opposed to an earlier forecast of 26% to 29% growth.

Despite the promising results, Mehdi Hosseini at Susquehanna reiterated a Neutral rating on Taiwan Semiconductor Manufacturing Company Limited stock on July 14 and lowered the target price from $90 to $88. Hosseini cited the worse-than-expected inventory correction as the reason for the lowered price target.

Baron Funds discussed its stance on Taiwan Semiconductor Manufacturing Company Limited in its Q1 2022 investor letter. Here’s what was said about the company:

“Semiconductor giant Taiwan Semiconductor Manufacturing Company Ltd. detracted in the first quarter due to rising geopolitical tensions, macroeconomic uncertainties, and concerns over softening demand for consumer electronics. We retain conviction that Taiwan Semi’s technological leadership, pricing power, and exposure to secular growth markets, including high-performance computing, automotive, and IoT, will allow the company to deliver above its 15% to 20% revenue growth target over the next several years.”

2. Advanced Micro Devices, Inc. (NASDAQ:AMD)

Number of Hedge Fund Holders: 83

Advanced Micro Devices, Inc. (NASDAQ:AMD) is Santa Clara, California-based semiconductor company that manufactures products such as Adaptive SOCs, CPUs, FPGAs, and GPUs.

In a note issued on July 11, Blayne Curtis at Barclays slashed the price target on Advanced Micro Devices, Inc. by $40 to $85 and maintained an Equal Weight rating on the stock. The revised target price provides a modest potential upside of nearly 4.8% from the most recent closing price as of July 15. The analyst highlighted the expected weakness during the second half of 2022 and the weakening demand for notebook computers during June 2022 as the reason for lowering the target price. Curtis expects the decline in notebook production to be around 17% YoY as opposed to the prior expectation of a decline of 12% YoY. The analyst also highlighted that Advanced Micro Devices, Inc. maintained its guidance for Q2 2022 during its investor day.

Carillon Tower Advisers shared its stance on Advanced Micro Devices, Inc. in its Q4 2021 investor letter. Here’s what the firm said:

“Advanced Micro Devices (AMD) supplies semiconductor chips for central processing units (CPUs) and graphic processing units (GPUs). The firm has been gaining share against its primary competitor in the datacenter server CPU space, as this rival has been unable to match the design and manufacturing capabilities of AMD and its partners. Investors are also looking forward to the closing of the previously announced merger with a semiconductor manufacturer that is another one of the portfolio’s holdings. The merger will increase AMD’s capabilities in the Field Programmable Gate Array (FPGA) chip space, and the combined company should possess the potential to win additional market share in the datacenter chip market.”

Overall, 83 hedge funds reported owning a stake in Advanced Micro Devices, Inc. as of Q1 2022.

1. NVIDIA Corporation (NASDAQ:NVDA)

Number of Hedge Fund Holders: 102

NVIDIA Corporation is the inventor of the graphic processing unit (GPU) and is currently a leader in the artificial intelligence cloud computing segment.

On July 14, Tristan Gerra at Baird lowered the price target on NVIDIA Corporation from $165 to $150 and reiterated a Neutral rating on the stock. The revised target price is 4.8% lower than the last closing price as of July 15. The analyst lowered the target price because he thinks that NVIDIA Corporation has an excessive inventory of GPUs due to a slowdown in various end markets. Gerra believes that NVIDIA Corporation would have to lower its shipment of GPUs before the launch of the RTX 40 chip series. Furthermore, the company’s monthly graphic card sales are also weak when compared to previous seasonal sales data.

Here’s what ClearBridge Investments said about NVIDIA Corporation in its Q1 2022 investor letter:

“Gaming is an attractive end market within the media/technology sector with strong growth and a long runway, particularly in mobile gaming. Unity’s platform provides an engine and toolkit for development and monetization of games, e-commerce and industrial applications, adding to our industry exposure, which also includes Nvidia (NASDAQ:NVDA) in graphic processing chips.”

ARK Investment Management is the leading hedge fund holder of NVIDIA Corporation as of Q2 2022.

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