In this article, we will be taking a look at 10 semiconductor stocks popular among elite hedge funds. To skip our detailed analysis of the semiconductor sector, you can go directly to see the 5 Semiconductor Stocks Popular Among Elite Hedge Funds.
On July 27, the US Senate approved the CHIPS Act 2022 with a 64-33 vote. The $280 billion bill aims to give the US an edge on China in manufacturing and technology. The bill’s passing represents a major instance of government intervention in industrial policy, something not seen for decades. The act is major support for the American semiconductor industry, pledging $52 billion in subsidies for domestic production, including investment tax credit for chip plants worth an estimated $24 billion over the next ten years, according to the New York Times.
The act has impacted major companies in the semiconductor industry, including Intel Corporation (NASDAQ:INTC), NVIDIA Corporation (NASDAQ:NVDA), and Micron Technology, Inc. (NASDAQ:MU). US senators see the legislation as vital to the strengthening of the American semiconductor industry, and decreasing reliance on foreign countries, such as Taiwan and China, for advanced chips. The introduction of this bill in the senate was one of the factors contributing to the recent rally in semiconductor stocks over the past trading sessions. Citigroup analysts have mentioned this July that this rally may well continue into August.
Bloomberg reported on July 21 that the Philadelphia Stock Exchange Semiconductor Index surged 19% since the start of the month, due to evidence of supply-chain issues subsiding. Major names in the semiconductor industry like NVIDIA Corporation (NASDAQ:NVDA) are now expected to climb in the coming trading sessions. Fiona Cincotta, City Index Ltd.’s senior financial markets analyst, commented that stocks of chip manufacturing companies are set to become more desirable to investors who are looking for investment opportunities in a market downturn. This rise in demand is expected to come from businesses relying increasingly on chip manufacturers to update their operations for cloud computing and artificial intelligence (AI).
Photo by Christian Wiediger on Unsplash
Our Methodology
Using Insider Monkey’s hedge fund data for the first quarter of 2022, we have selected semiconductor stocks that proved to be the most popular among the 912 hedge funds we tracked in that quarter. The stocks are ranked on the basis of the number of hedge funds holding stakes in them, from the lowest to the highest. They are also popular among analysts, as shown by the analyst ratings and price targets we have mentioned with each stock.
Semiconductor Stocks Popular Among Elite Hedge Funds
10. SolarEdge Technologies, Inc. (NASDAQ:SEDG)
Number of Hedge Fund Holders: 47
SolarEdge Technologies, Inc. (NASDAQ:SEDG) is an information technology company primarily in the business of semiconductors and related devices. The company also designs and develops direct current optimized inverter systems for solar photovoltaic (PV) installations. It offers residential, commercial, and large-scale PV, energy storage and backup, and electric vehicle charging.
JPMorgan analyst Mark Strouse holds an Overweight rating on SolarEdge Technologies, Inc. (NASDAQ:SEDG) shares as of this July. The analyst also raised his price target on the shares to $396. Strouse is bullish on the alternative energy sector since the rising prices of fossil fuels and focus on energy security are raising demand for renewables. This trend makes stocks like SolarEdge Technologies, Inc. (NASDAQ:SEDG) some of the top picks for institutional investors in 2022.
This July, a memorandum of understanding (MOU) was announced between the US and Canada which would lift tariffs on Canadian solar products. The MOU led to solar stocks like SolarEdge Technologies, Inc. (NASDAQ:SEDG) to soar.
In the first quarter of 2022, 47 hedge funds were long SolarEdge Technologies, Inc. (NASDAQ:SEDG), with a total stake value of $835 million. Catherine Wood’s ARK Investment Management was the largest stakeholder in the company, holding 8,533 shares worth about $2.3 million.
ClearBridge Investments, an investment management firm, mentioned SolarEdge Technologies, Inc. (NASDAQ:SEDG) in its first-quarter 2022 investor letter. Here’s what they said:
“SolarEdge Technologies (NASDAQ:SEDG) is a key solar holding that should be able to take advantage of greater incentives for solar installations in many geographies. The company was also a strong contributor for the quarter, overcoming pressures of a higher discount rate on their strong projected future earnings, raw material inflation and supply chain challenges as their long-term value was reaffirmed.”
9. ON Semiconductor Corporation (NASDAQ:ON)
Number of Hedge Fund Holders: 48
ON Semiconductor Corporation (NASDAQ:ON) is a semiconductor company providing intelligent sensing and power solutions globally. The company’s power tech enables the electrification of the automotive industry. It offers analog, discrete, module, and integrated semiconductor products performing multiple application functions such as power switching and conversion.
Christopher Danely, an analyst at Citi, holds a Buy rating on ON Semiconductor Corporation (NASDAQ:ON) shares as of this July.
Citi analysts led by Danely also mentioned that ON Semiconductor Corporation (NASDAQ:ON) could be among the semiconductor stocks contributing the the positive performance of semiconductor stocks, leading to a short-term bounce for the sector. The analysts cited the positive earnings of the company as evidence, with Danely opening a positive catalyst watch on ON Semiconductor Corporation (NASDAQ:ON) shares in anticipation of good earnings. This makes it one of the most popular semiconductor stocks among elite hedge funds currently.
Out of 912 hedge funds, 48 funds were long ON Semiconductor Corporation (NASDAQ:ON) in the first quarter, with a total stake value of $1.3 billion. In the previous quarter, 47 hedge funds were long the stock, with a total stake value of $1.6 billion.
Artisan Partners, a high value-added investment management firm, mentioned ON Semiconductor Corporation (NASDAQ:ON) in its fourth-quarter 2021 investor letter. Here’s what they said:
“ON Semiconductor is a global supplier of advanced semiconductors for sophisticated electronics applications within the automotive, industrial, communications, consumer and computing end-product markets. The company operates across three segments: power solutions, advanced solutions and intelligent sensing. A new management team, which took over toward the end of 2020, is working to dramatically improve the company’s performance by rightsizing its manufacturing footprint, exiting more commoditized products and investing in several compelling growth opportunities. When the dust has settled, we expect the portfolio to be more focused on the auto and industrial segments. As auto OEMs incorporate more automated safety technology and car fleets transition from internal combustion engines to battery electric vehicles, ON’s image sensors for cars and silicon carbide inverters— which extend EV battery efficiency—will be in high demand. This mix shift should drive ON’s margins higher over time. With shares trading at an attractive valuation, we initiated a GardenSM position.”
ON Semiconductor Corporation (NASDAQ:ON), like Intel Corporation (NASDAQ:INTC), NVIDIA Corporation (NASDAQ:NVDA), and Micron Technology, Inc. (NASDAQ:MU), is a top semiconductor stock popular among investors today.
8. Marvell Technology Group Ltd. (NASDAQ:MRVL)
Number of Hedge Fund Holders: 63
Marvell Technology Group Ltd. (NASDAQ:MRVL) is another player in the semiconductor industry which designs and develops analog, mixed-signal, digital signal processing, and embedded and standalone integrated circuits. The company has a portfolio of Ethernet solutions and a range of storage products to offer.
Analyst Blayne Curtis at Barclays holds an Overweight rating on Marvell Technology Group Ltd. (NASDAQ:MRVL) shares as of this July, alongside a price target of $60.
JPMorgan analysts commented this July that Marvell Technology Group Ltd. (NASDAQ:MRVL) is among the semiconductor stocks that will continue benefitting from the strong demand for cloud networking products. UBS also reiterated that Marvell Technology Group Ltd. (NASDAQ:MRVL) was one of the investment firm’s favorite semiconductor stocks, which helps the stock rise in popularity among major hedge funds.
Marvell Technology Group Ltd. (NASDAQ:MRVL) had 63 hedge funds holding stakes in it in the first quarter. Their total stake value was $2.4 billion. In the previous quarter, 60 hedge funds were long the stock, with a total stake value of $2.5 billion.
7. Analog Devices, Inc. (NASDAQ:ADI)
Number of Hedge Fund Holders: 67
Analog Devices, Inc. (NASDAQ:ADI) is a semiconductor company designing, manufacturing, and testing integrated circuits, software, and subsystems that leverage analog, mixed-signal, and digital signal processing technologies. The company offers data converter products and translates digital data into analog signals.
Toshiya Hari, an analyst at Goldman Sachs, holds a Buy rating on Analog Devices, Inc. (NASDAQ:ADI) shares as of this July. Hari also has a $167 price target on the shares.
The stock topped the list of semiconductor stocks at Citi this July because of its defensive stance which gives it an edge in light of worries over earnings cuts. Analog Devices, Inc. (NASDAQ:ADI) has overtaken Texas Instruments Inc. (NASDAQ:TXN) on Bank of America’s list of preferred semiconductor stocks as well, becoming the top analog chip company. BofA cited the company’s accelerated free cash flow returns for the decision, something many elite hedge funds have also been attracted by in 2022.
As of the close of the first quarter, 67 hedge funds held stakes in Analog Devices, Inc. (NASDAQ:ADI). Their total stake value was $4.8 billion. Bourgeon Capital was the largest stakeholder in the company, holding 20,400 shares worth about $2.9 million.
Like Intel Corporation (NASDAQ:INTC), NVIDIA Corporation (NASDAQ:NVDA), Micron Technology, Inc. (NASDAQ:MU), Analog Devices, Inc. (NASDAQ:ADI) is a semiconductor stock investors are piling into today.
6. Broadcom Corporation (NASDAQ:AVGO)
Number of Hedge Fund Holders: 71
Broadcom Corporation (NASDAQ:AVGO) is an information technology company developing and supplying semiconductor devices. The company focuses on complex digital and mixed signal complementary metal oxide semiconductor based devices and analog III-V based products. It operates through its Semiconductor Solutions and Infrastructure Software segments.
This July, Deutsche Bank analyst Ross Seymore reiterated a Buy rating on Broadcom Corporation (NASDAQ:AVGO) shares. The analyst also holds a $635 price target on the company’s shares.
The same month, JPMorgan also mentioned Broadcom Corporation (NASDAQ:AVGO) as one of the semiconductor stocks that would benefit from the high demand for cloud networking products. JPMorgan analysts noted that the company’s Tomahawk 3/4 and Jericho 2/2c switching/routing products continue to see strong demand this year, improving Broadcom Corporation’s (NASDAQ:AVGO) popularity among consumers and major hedge funds looking to invest alike.
Our hedge fund data for the first quarter shows 71 hedge funds long Broadcom Corporation (NASDAQ:AVGO), with a total stake value of $5.5 billion. In the previous quarter, 62 funds were long the stock, with a total stake value of $4.8 billion.
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Disclosure: None. 10 Semiconductor Stocks Popular Among Elite Hedge Funds is originally published on Insider Monkey.
