In this article, we discuss the 10 semiconductor stocks that US politicians are buying.
The global semiconductor industry has been one of the biggest winners of the rising inflation in the past few months, a problem that has arisen due to a mix of high demand and supply chain problems in the wake of the post-pandemic economic reopening. This boom for chip stocks has slowly started to fade as the central bank embarks on a policy of aggressive rate hikes to curb inflation and the demand for chips in the personal computer industry starts to fall. The sector is still positioned for robust growth and could reach $600 billion in value this year.
According to a report on the sector by research firm Deloitte, the importance of the chip industry to the overall health of the world economy can be judged by the fact that tech giants like Amazon.com, Inc. (NASDAQ:AMZN), Sea Limited (NYSE:SE), and Tesla, Inc. (NASDAQ:TSLA) often rely on semiconductor manufacturers for supply, and shortages of these chips, which are dirt-cheap compared to the products sold by these firms, have resulted in losses worth $500 billion worldwide in the past two years.
The chip industry has also led to a global trade between superpowers like the United States and China. Chinese firms dominate the chips sector but the US recently announced plans to invest hundreds of billions into the local semiconductor firms to make them more competitive on a global level. US politicians have been buying up stakes in semiconductor stocks this summer in anticipation of this spending. Deloitte estimates that despite a near-term demand slowdown, the industry will still grow 10% in 2022 and become even more critical to the world economy.
Our Methodology
The companies listed below were picked from the Periodic Transaction Report(s) that US Congress members who trade stocks are obliged to file. Companies that operate in the semiconductor sector were preferred for the list. It is important to clarify that the companies were picked from the public record of investments US Congress members and their families have made in the past few months. The purchases may not have been made by the Congress members themselves but only disclosed on behalf of their families. Data from around 900 elite hedge funds tracked by Insider Monkey in the first quarter of 2022 was used to identify the number of hedge funds that hold stakes in each firm.
Photo by Umberto on Unsplash
US Politicians are Buying These Semiconductor Stocks
10. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 71
Broadcom Inc. (NASDAQ:AVGO) supplies semiconductor infrastructure software solutions. US House member Diana Harshbarger on August 2 revealed that she had bought Broadcom Inc. shares worth somewhere between $1,000 and $15,000. In the filing, she detailed that the transaction in this regard took place in late June.
On June 29, Bank of America analyst Vivek Arya maintained a Buy rating on Broadcom Inc. stock and lowered the price target to $625 from $780, noting that semiconductor downturns happen every few years and one could be due this year.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Cantillon Capital Management is a leading shareholder in Broadcom Inc., with 1 million shares worth more than $652 million.
Just like Amazon.com, Inc., Sea Limited, and Tesla, Inc., Broadcom Inc. is one of the stocks that US politicians are trading.
In its Q4 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Broadcom Inc. 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. 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 Inc. 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.”
9. NXP Semiconductors N.V. (NASDAQ:NXPI)
Number of Hedge Fund Holders: 43
NXP Semiconductors N.V. (NASDAQ:NXPI) makes and sells various products related to semiconductors. In mid-June, US House member Ro Khanna disclosed in a mandatory filing that his child had bought the shares of NXP Semiconductors N.V. worth somewhere around $1,000 and $15,000. The transaction in this regard was disclosed almost a month after it was made in early May.
On July 15, Goldman Sachs analyst Toshiya Hari maintained a Neutral rating on NXP Semiconductors N.V. stock and lowered the price target to $150 from $181, noting that there was a deterioration in the overall macro operating environment for chip firms.
Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in NXP Semiconductors N.V., with 923,855 shares worth more than $170 million.
In its Q1 2022 investor letter, Sound Shore Management, an asset management firm, highlighted a few stocks and NXP Semiconductors N.V. was one of them. Here is what the fund said:
“Similarly, analog chip supplier NXP Semiconductors N.V. declined even though the company reported above consensus revenue growth. A leading chip maker for infrastructure and automotive applications, we view NXP Semiconductors N.V. as a “new industrial,” uniquely positioned to benefit from increased chip content per application/vehicle. This includes electric and autonomous vehicles and more broadly, connectivity and the internet of things. We added the stock to the portfolio during the volatile fourth quarter of 2018 at just 10 times earnings. Today, NXP is still valued at a very reasonable 14 times earnings.”
8. ASML Holding N.V. (NASDAQ:ASML)
Number of Hedge Fund Holders: 46
ASML Holding N.V. (NASDAQ:ASML) makes and sells advanced semiconductor equipment systems. On July 25, US House member Michael McCaul disclosed a transaction related to ASML Holding N.V. stock worth somewhere between $50,000 and $100,000. The member revealed that his wife had bought the shares of the firm worth the above mentioned amount in late June.
On July 21, JPMorgan analyst Sandeep Deshpande maintained an Overweight rating on ASML Holding N.V. stock and lowered the price target to $794 from $925, appreciating the second quarter earnings results of the firm.
Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in ASML Holding N.V., with 4.4 million shares worth more than $2.9 billion.
In its Q1 2022 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and ASML Holding N.V. was one of them. Here is what the fund said:
“During the quarter, we reduced our semiconductor exposure through the trim of ASML Holding N.V. 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.”
7. KLA Corporation (NASDAQ:KLAC)
Number of Hedge Fund Holders: 52
KLA Corporation (NASDAQ:KLAC) markets process control and yield management solutions for the semiconductor industry. In mid-June, US House member Ro Khanna disclosed a transaction related to KLA Corporation stock worth somewhere between $1,000 and $15,000. The member revealed that his wife had bought the stock worth the above mentioned amount in late May.
On July 29, Deutsche Bank analyst Sidney Ho maintained a Buy rating on KLA Corporation stock and raised the price target to $400 from $385, noting that the firm was benefiting from the robust demand despite supply chain headwinds.
At the end of the first quarter of 2022, 52 hedge funds in the database of Insider Monkey held stakes worth $1.8 billion in KLA Corporation, compared to 49 in the previous quarter worth $2.4 billion.
In its Q1 2022 investor letter, Vltava Fund, an asset management firm, highlighted a few stocks and KLA Corporation was one of them. Here is what the fund said:
“We then used the money freed up to, among other things, open three new positions. The stock price declines during the Russian invasion brought a lot of good prices to the market. Out of all the possibilities we considered, we picked the stock of KLA Corporation.
KLA Corporation develops leading-edge equipment and services that enable innovation throughout the electronics industry. It specialises in process management and control in semiconductor manufacturing and the related nano-electronics industries. During manufacturing processes, products must be inspected for defects and correct critical dimensions in order to identify and eliminate possible sources of problems. As customers continue to enforce Moore’s Law, smaller chips must meet more precise specifications, which in turn increases the need for advanced inspection and diagnostic tools. This is a key step within the entire manufacturing process and one in which the company has built a very strong, and in places dominant, global position. We have been watching and waiting for an opportunity to acquire this stock for some time already, and this year’s drop in its price finally prompted us to buy.”
6. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 73
QUALCOMM Incorporated (NASDAQ:QCOM) develops and sells foundational technologies for the wireless industry. On August 11, US House member Kathy Manning disclosed that her husband had bought QUALCOMM Incorporated stock worth around $1,000-$15,000. The transaction in this regard took place a couple of weeks before it was made public.
On July 28, Canaccord analyst T. Michael Walkley maintained a Buy rating on QUALCOMM Incorporated stock and lowered the price target to $225 from $250, noting that the firm had strong leadership in the 5G space that positioned it for share gains.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in QUALCOMM Incorporated, with 3.5 million shares worth more than $538 million.
In addition to Amazon.com, Inc., Sea Limited, and Tesla, Inc., QUALCOMM Incorporated is one of the stocks that US politicians are buying.
5. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 83
Advanced Micro Devices, Inc. (NASDAQ:AMD) operates as a semiconductor manufacturer. On June 15, US House member Ro Khanna revealed that his child had bought Advanced Micro Devices, Inc. stock worth somewhere between $1,000 to $15,000. The transaction in this regard took place in early May.
On August 3, investment advisory KGI Securities upgraded Advanced Micro Devices, Inc. stock to Outperform from Neutral with a price target of $125. Analyst Christine Wang issued the ratings update.
Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Advanced Micro Devices, Inc., with 24 million shares worth more than $2.6 billion.
Here is what Carillon Tower Advisers had to say about Advanced Micro Devices, Inc. in its fourth-quarter 2021 investor letter:
“Advanced Micro Devices, Inc. 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.”
4. Applied Materials, Inc. (NASDAQ:AMAT)
Number of Hedge Fund Holders: 74
Applied Materials, Inc. (NASDAQ:AMAT) provides equipment, services, and software for the semiconductor industry. According to the latest filings, US House member Ro Khanna disclosed a transaction related to Applied Materials, Inc. stock worth around $1,000-$15,000 on July 11. The politician revealed that his child had bought the shares of the firm worth the above mentioned amount in mid-June.
On July 15, Wells Fargo analyst Joe Quatrochi maintained an Overweight rating on Applied Materials, Inc. stock and lowered the price target to $110 from $135, noting that the second quarter earnings were a difficult step for semiconductor stocks.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm Generation Investment Management is a leading shareholder in Applied Materials, Inc., with 4.2 million shares worth more than $560 million.
3. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 76
Intel Corporation (NASDAQ:INTC) markets key technologies for smart devices. On August 11, US House member Kathy Manning disclosed a transaction related to Intel Corporation stock worth somewhere between $1,000 and $15,000. The member revealed that her husband bought the stock worth the above mentioned amount in mid-July.
On July 29, Wedbush analyst Matt Bryson maintained an Underperform rating on Intel Corporation stock and lowered the price target to $35 from $44, noting that the firm was better positioned to meet expectations after the second quarter earnings miss.
At the end of the first quarter of 2022, 76 hedge funds in the database of Insider Monkey held stakes worth $3.1 billion in Intel Corporation, compared to 72 in the previous quarter worth $5.5 billion.
Baron Funds, an asset management firm, mentioned Intel Corporation in its first-quarter 2022 investor letter. Here is what they said:
“Intel Corporation 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.”
2. Micron Technology (NASDAQ:MU)
Number of Hedge Fund Holders: 78
Micron Technology (NASDAQ:MU) makes and sells memory and storage products. On August 11, US House member Kathy Manning disclosed a transaction related to Micron Technology stock worth somewhere between $1,000 and $15,000. The member revealed that she had bought the stock worth the above-mentioned amount in late July.
On August 10, Deutsche Bank analyst Sidney Ho maintained a Buy rating on Micron Technology stock and lowered the price target to $68 from $70, noting that the shares of the firm were close to a trough.
At the end of the first quarter of 2022, 78 hedge funds in the database of Insider Monkey held stakes worth $3.4 billion in Micron Technology, compared to 83 in the preceding quarter worth $5.5 billion.
1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 102
NVIDIA Corporation (NASDAQ:NVDA) operates as a visual computing firm. Per latest disclosures, US House member Kathy Manning bought NVIDIA Corporation stock worth around $15,000-$50,000. The transaction was disclosed almost two weeks after it was made.
On August 9, Truist analyst William Stein maintained a Buy rating on NVIDIA Corporation stock and lowered the price target to $216 from $283, noting the demand for the data center and AI segments of the firm would remain constructive in the coming months.
At the end of the first quarter of 2022, 102 hedge funds in the database of Insider Monkey held stakes worth $6.3 billion in NVIDIA Corporation, compared to 110 the preceding quarter worth $10.4 billion.
In its Q1 2022 investor letter, RiverPark Funds, an asset management firm, highlighted a few stocks and NVIDIA Corporation was one of them. Here is what the fund said:
“NVIDIA Corporation is the leading designer of graphics processing chips (commonly known as GPU’s- graphics processing units), required for powerful computer processing. Over the past 20 years, the company has evolved through innovation and adaptation from a predominantly gaming- focused chip vendor to one of the largest semiconductor/software vendors in the world, dominating the core secular growth markets of gaming, data centers and professional visualization. Over the past decade, the company has grown revenue at a compound annual rate of over 20% while expanding operating margins and, through its asset light business model, producing ever increasing amounts of free cash flow. For 2021 the company generated 61% revenue growth to $27 billion, expanded its EBITDA margins to over 44% and generated over $8 billion of free cash flow. Over the past five years, the company has generated a cumulative $23 billion of FCF after cumulative capital expenditures of less than $4 billion.
We expect future growth to remain robust as NVIDIA Corporation chips and software are critical to many of the core technologies being adopted globally, including cloud computing, virtual reality and advanced artificial intelligence. As with NFLX, we took advantage of the over 40% recent drop in the company’s shares over the last several months to initiate a small position.”
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This article is originally published at Insider Monkey.
