Semiconductor Stocks: 10 Biggest Losers in September

Published on September 22, 2022 at 9:13 am by Usman Kabir in Hedge Funds, News

In this article, we discuss semiconductor stocks and the 10 biggest losers in September. If you want to read about some more semiconductor stocks, go directly to Semiconductor Stocks: 5 Biggest Losers in September.

Semiconductor stocks have started free falling as recession fears and concerns about softening demand hit the industry. The worsening macro environment comes even as NVIDIA Corporation (NASDAQ:NVDA), one of the premier chip stocks in the US, unveiled several new products, GPUs, and the first software-as-a-service offering during an annual conference on September 20. Some of the other chip stocks in the red include Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) and Advanced Micro Devices, Inc. (NASDAQ:AMD).

The decline is being attributed to a hotter-than-expected inflation report by the US government for the month of August that has forced the Federal Reserve to hike the interest rate by three-quarters of a percentage point for a third straight time and signaled that borrowing costs would keep rising this year. Per a report by news agency Reuters, the central bank foresees the policy rate rising at a faster pace and to a higher level than expected, the economy slowing to a crawl, and unemployment rising to a degree historically associated with recessions.

The hike is bad news for chip stocks that had been boosted by the recent approval of the CHIPS Act, a legislation aimed at providing massive governmental funding for the semiconductor sector to decrease reliance on Chinese firms. The bill had earmarked $52 billion in government subsidies for chip stocks to boost production in the US, $200 billion over the next decade for scientific research and development in the industry, and nearly 25% in investment tax credits for chip firms.

Our Methodology

The chip companies that have registered a close to or more than 10% percentage decline in their share price over the past month were selected for the list. In order to provide readers with some context for their investment choices, the business fundamentals and analyst ratings for the stocks are also discussed. Data from around 900 elite hedge funds tracked by Insider Monkey in the second quarter of 2022 was used to identify the number of hedge funds that hold stakes in each firm.

Photo by Yogesh Phuyal on Unsplash

Semiconductor Stocks: Biggest Losers in September

10. ASML Holdings N.V. (NASDAQ:ASML)

Number of Hedge Fund Holders: 47

Percentage Decline in Share Price Over Past Month as of September 21: 12%

ASML Holdings N.V. (NASDAQ:ASML) develops, produces, markets, sells, and services advanced semiconductor equipment systems. The firm is one of the better defensive plays in the chip sector as it has a solid dividend profile. The company has consistently paid a dividend to shareholders for the past ten years. In the last seven years, these payouts have also grown consistently. The sector median in this regard is just three years. On July 20, the firm declared a quarterly dividend of €1.37 per share.

On August 31, UBS analyst Francois-Xavier Bouvignies upgraded ASML Holdings N.V. (NASDAQ:ASML) stock to Buy from Neutral and raised the price target to EUR 665 from EUR 630, noting the firm was one of the most attractive names in the semi space.

At the end of the second quarter of 2022, 47 hedge funds in the database of Insider Monkey held stakes worth $3.7 billion in ASML Holdings N.V. (NASDAQ:ASML), compared to 45 in the previous quarter worth $5 billion.

Just like NVIDIA Corporation (NASDAQ:NVDA), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), and Advanced Micro Devices, Inc. (NASDAQ:AMD), ASML Holdings N.V. (NASDAQ:ASML) is one of the biggest semiconductor losers in September.

In its Q2 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and ASML Holdings N.V. (NASDAQ:ASML) was one of them. Here is what the fund said:

“ASML Holdings N.V. (NASDAQ:ASML) designs and manufactures semiconductor production equipment. It specializes in photolithography equipment, where light sources are used to photo-reactively create patterns on wafers that become printed circuits. ASML is the dominant leader across all types of lithography but, most importantly, is the only company selling equipment for extreme ultra-violet (EUV) lithography, the latest generation technology.

Indeed, because of the stalling out of Moore’s Law, advanced lithography of larger and multi-patterned silicon chips has been critical for leading-edge chip manufacturing and continued improvement in semiconductor chip performance over time. The company is well positioned to continue growing above industry rates as it rapidly adds capacity across its entire business to meet rising industry demand, especially from leading-edge customers continuing to invest to stay ahead of their competitors and drive chip performance forward.

Additionally, the introduction of high-NA EUV technology in the middle of the decade will add another leg to the growth opportunity.”

9. NXP Semiconductors N.V. (NASDAQ:NXPI)

Number of Hedge Fund Holders: 55

Percentage Decline in Share Price Over Past Month as of September 21: 8%

NXP Semiconductors N.V. (NASDAQ:NXPI) offers various semiconductor products. On July 25, the firm posted earnings for the second quarter of 2022, reporting earnings per share of $2.53, beating analyst expectations by $0.10. The revenue over the period was $3.3 billion, up more than 27% compared to the revenue over the same period last year and beating market estimates by $40 million. The firm guided revenue $200 million above consensus estimates for the next quarter.

On July 27, investment advisory Mizuho maintained a Neutral rating on NXP Semiconductors N.V. (NASDAQ:NXPI) stock and lowered the price target to $200 from $205. Analyst Vijay Rakesh issued the ratings update.

Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Millennium Management is a leading shareholder in NXP Semiconductors N.V. (NASDAQ:NXPI), with 2.5 million shares worth more than $368 million.

In its Q2 2022 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Broadcom Inc. (NASDAQ:AVGO) was one of them. Here is what the fund said:

“Within information technology (IT), where we maintain an underweight compared to the benchmark, we took profits in NXP Semiconductors (NASDAQ:NXPI), a part of the pro-cyclical reflation basket built up in 2020. Despite strong current fundamentals, there is an ongoing risk of major supply increases in the semiconductor industry as capacity announcements are near records.”

8. Intel Corporation (NASDAQ:INTC)

Number of Hedge Fund Holders: 65

Percentage Decline in Share Price Over Past Month as of September 21: 16%

Intel Corporation (NASDAQ:INTC) engages in the design, manufacture, and sale of computer products and technologies worldwide. On September 12, reports indicated that the company had reduced the valuation for the upcoming initial public offering of Mobileye, its self-driving unit, to $30 billion from a previously hoped for $50 billion. The reports also revealed that the share sale could be delayed due to the valuation decline and the broader slump in the stock market.

On September 8, Deutsche Bank analyst Ross Seymore maintained a Hold rating on Intel Corporation (NASDAQ:INTC) stock and lowered the price target to $35 from $38, predicting that the Q3 results of the firm would come in near the low end of the guidance range.

At the end of the second quarter of 2022, 65 hedge funds in the database of Insider Monkey held stakes worth $2.5 billion in Intel Corporation (NASDAQ:INTC), compared to 76 in the preceding quarter worth $3.2 billion.

In its Q2 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Intel Corporation (NASDAQ:INTC) was one of them. Here is what the fund said:

“Then, there is the case of Intel Corporation (NASDAQ:INTC). A blue-chip tech champion with a market capitalization of over $500 billion in early 2000, the stock was trading at a P/E multiple of 42. It was a fast-growing company whose stock price and multiple declined more or less in line with its peers. However, unlike Google, Intel’s net income has grown from $7.3 billion in 1999 to $19.9 billion in 2021, a compounded annual growth rate of just 4.7%. Its growth from the dot com era has not proven to be durable, and Intel has yet to trade at the price it attained in 1999.”

7. Broadcom Inc. (NASDAQ:AVGO)

Number of Hedge Fund Holders: 66

Percentage Decline in Share Price Over Past Month as of September 21: 9%

Broadcom Inc. (NASDAQ:AVGO) designs, develops, and supplies various semiconductor devices. On September 1, the firm posted earnings for the third fiscal quarter of 2022, reporting earnings per share of $9.73, beating analyst expectations by $0.18. The revenue over the period was $8.4 billion, up more than 24% compared to the revenue over the same period last year and beating market estimates by $50 million. The firm guided revenue $200 million above consensus estimates for the next quarter.

On September 2, Truist analyst William Stein maintained a Buy rating on Broadcom Inc. (NASDAQ:AVGO) stock and lowered the price target to $630 from $658, noting the firm had delivered another great quarter despite negative trends.

At the end of the second quarter of 2022, 66 hedge funds in the database of Insider Monkey held stakes worth $4 billion in Broadcom Inc. (NASDAQ:AVGO), compared to 71 the preceding quarter worth $5.5 billion.

In its Q4 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Broadcom Inc. (NASDAQ:AVGO) was one of them. Here is what the fund said:

“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 Inc. (NASDAQ:AVGO) 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.”

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

Number of Hedge Fund Holders: 67

Percentage Decline in Share Price Over Past Month as of September 21: 14%

Applied Materials, Inc. (NASDAQ:AMAT) provides manufacturing equipment, services, and software to the semiconductor, display, and related industries. The firm is one of the beneficiaries of the CHIPS Act that was passed by lawmakers in the US recently. The Act will limit the sale of American equipment to Chinese chip firms, allow $52 billion in government spending on the chip sector to improve manufacturing capabilities, and also pour $200 billion into scientific research in the sector to get ahead of the Chinese.

On July 15, investment advisory Wells Fargo maintained an Overweight rating on Applied Materials, Inc. (NASDAQ:AMAT) stock and lowered the price target to $110 from $135. Analyst Joe Quatrochi issued the ratings update.

Among the hedge funds being tracked by Insider Monkey, California-based investment firm Generation investment Management is a leading shareholder in Applied Materials, Inc. (NASDAQ:AMAT), with 6.1 million shares worth more than $555 million.

Along with NVIDIA Corporation (NASDAQ:NVDA), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), and Advanced Micro Devices, Inc. (NASDAQ:AMD), Applied Materials, Inc. (NASDAQ:AMAT) is one of the biggest semiconductor losers in September.

In its Q4 2021 investor letter , Vulcan Value Partners, an asset management firm, highlighted a few stocks and Applied Materials, Inc. (NASDAQ:AMAT) was one of them. Here is what the fund said:

“Applied Materials, Inc. (NASDAQ:AMAT), 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.”

Click to continue reading and see Semiconductor Stocks: 5 Biggest Losers in September.

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