In this article, we will discuss the 12 Best Semiconductor Stocks To Buy Now. You can skip our detailed industry analysis and go directly to the 5 Best Semiconductor Stocks To Buy Now.
Whether it’s the remote of your television or your cellphone, semiconductors are an integral part of the devices around us and are more ubiquitous than you might think. The demand for semiconductors will keep rising as long as advancements and innovations are made in technology. In 2021, global semiconductors sales stood at $555.89 billion, up 26.2% YoY. Some of the leading semiconductor companies include Samsung Electronics, Intel Corporation (NASDAQ:INTC), and Advanced Micro Devices, Inc. (NASDAQ:AMD).
The semiconductor industry has also been affected by the outbreak of COVID-19. The shift to work from home generated demand for more tech devices, and the semiconductor industry struggled to keep up with the demand for chips worldwide. However, as the central banks have started monetary tightening, causing a slowdown in the global economy, the demand for discretionary tech products has reduced, causing a decline in sales for semiconductor companies. In 2023, the total sales of the global semiconductor industry are forecasted to be at $596 billion, a 3.6% decline YoY.
In the coming years, the applications expected to drive the global semiconductor industry include electric vehicles and smartphones. In 2020, the smartphone semiconductor market size stood at $116 billion and is forecasted to reach $162 billion by 2030. The global market size for battery electric vehicles in 2020 stood at $47 billion and is forecasted to reach $212 billion by 2030, growing at a CAGR of 14.1% during the period.
Photo by Slejven Djurakovic on Unsplash
Our Methodology
We picked some of the notable semiconductor stocks that have a low PE ratio and high popularity among hedge funds. PE ratio is an effective metric to judge the attractiveness of a stock’s price. A lower P/E ratio is preferred by investors as it means that the stock is trading at a cheaper price as compared with its peers. We gauged the hedge fund sentiment from Insider Monkey’s database of 920 elite hedge funds.
12. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Forward P/E ratio as of December 15: 18.02
Number of Hedge Fund Holders: 89
Advanced Micro Devices, Inc. (NASDAQ:AMD) designs microprocessors for computers and consumer electronics products. The majority of its revenue is generated from PCs and data center markets through the sale of CPUs and GPUs. Advanced Micro Devices, Inc. (NASDAQ:AMD) supplies chips for gaming consoles such as the Sony PlayStations and Microsoft Xbox. In 2022, it acquired Xilinx to diversify its business and increase opportunities in crucial end markets, including the data center.
On November 15, 2022, Chris Caso, an analyst at Credit Suisse, started covering Advanced Micro Devices, Inc. (NASDAQ:AMD) with a price target of $90 and an Outperform rating on the stock. The analyst expects further growth in server share gains and the cloud market in the future.
As per Insider Monkey’s database, 89 hedge funds remained bullish on Advanced Micro Devices, Inc. (NASDAQ:AMD) at the end of Q3 2022. Fisher Asset Management came out to be the biggest holder of the company’s shares at the end of the quarter.
In addition to Advanced Micro Devices, Inc. (NASDAQ:AMD), Skyworks Solutions, Inc. (NASDAQ:SWKS), United Microelectronics Corporation (NYSE:UMC), and ASE Technology Holding Co., Ltd. (NYSE:ASX) are included in our list of 12 best semiconductor stocks to buy now.
11. ON Semiconductor Corporation (NASDAQ:ON)
Forward P/E ratio as of December 15: 14.93
Number of Hedge Fund Holders: 45
ON Semiconductor Corporation (NASDAQ:ON) makes semiconductors for automotive and industrial markets. The firm is the largest supplier of image sensors to the automotive market and the second-largest power chipmaker in the world. The company is shifting its focus to emerging applications such as electric vehicles, industrial automation, autonomous vehicles, and renewable energy.
On November 1, 2022, Joseph Moore, an analyst at Morgan Stanley, increased his price target on ON Semiconductor Corporation (NASDAQ:ON) to $70.40 while keeping an Equal Weight rating on the stock. According to the analyst, the Q3 results were satisfying, but the margins are being weighed down by startup costs for silicon carbide.
As per Insider Monkey’s database, 45 hedge funds had stakes in ON Semiconductor Corporation (NASDAQ:ON) at the end of the third quarter. Whale Rock Capital Management remained the leading stakeholder in the company at the end of Q3 2022.
10. Intel Corporation (NASDAQ:INTC)
Forward P/E ratio as of December 15: 15.04
Number of Hedge Fund Holders: 69
Intel Corporation (NASDAQ:INTC) designs and manufactures microprocessors for personal computers worldwide. Intel Corporation (NASDAQ:INTC) was the first to develop the x86 design for microprocessors. Intel Corporation (NASDAQ:INTC) has acquired Altera Corporation, Mobileye Global Inc., and Habana Labs Ltd. to improve its standing in the non-PC sector. Intel Corporation (NASDAQ:INTC) provides a forward dividend yield of 5.17% at the current price level.
On October 28, 2022, Blayne Curtis, an analyst at Barclays, upgraded his rating on Intel Corporation (NASDAQ:INTC) to Equal Weight with a price target of $30. According to the analyst, the bottom is close for the stock with the company’s cost-cutting measures helping in preserving the book value of the stock.
69 hedge funds are currently bullish on Intel Corporation (NASDAQ:INTC) as per Insider Monkey’s database. Two Sigma Advisors had the leading stake in the company at the end of Q3 2022.
Baron Funds mentioned the company in its Q2 2022 investor letter and stated that:
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.
9. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Forward P/E ratio as of December 15: 13.57
Number of Hedge Fund Holders: 87
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the largest dedicated chip foundry in the world as of 2021. The company’s illustrious customer base includes Apple Inc. (NASDAQ:AAPL), Advanced Micro Devices, Inc. (NASDAQ:AMD), and NVIDIA Corporation (NASDAQ:NVDA).
On November 18, 2022, Hans Engel, an analyst at Erste Group, upgraded his rating on Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) to Buy, citing the increased diversification resulting from the company’s first fab facility in the United States.
At the end of Q3 2022, 87 hedge funds in Insider Monkey’s database were long on Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) at the end of the quarter. Berkshire Hathaway remained the leading stakeholder of the company at the end of Q3 2022.
Baron Funds mentioned the company in its Q2 2022 investor letter. Here is what the fund said:
Semiconductor giant Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)detracted in the second quarter due to macroeconomic uncertainties and 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 strong revenue growth over the next several years.
8. Broadcom Inc. (NASDAQ:AVGO)
Forward P/E ratio as of December 15: 13.44
Number of Hedge Fund Holders: 74
Broadcom Inc. (NASDAQ:AVGO) focuses on radio frequency filters and amplifiers used in high-end smartphones. To expand its software offerings, the corporation has bought Brocade Communications Systems, CA Technologies, and is currently in the process of acquiring VMware. Broadcom Inc. (NASDAQ:AVGO) is also a healthy dividend-paying company providing a current dividend yield (fwd) of 3.20%
On December 12, 2022, Vivek Arya, an analyst at BofA, increased his price target on Broadcom Inc. (NASDAQ:AVGO) to $650 while keeping a Buy rating on the stock. The analyst believes that the company is attractive at the current price level on a pure valuation basis with its strong cash flow and pricing power.
According to Insider Monkey’s database, 74 hedge funds had stakes in Broadcom Inc. (NASDAQ:AVGO) at the end of the September quarter. Fisher Asset Management remained the leading stakeholder of the company at the end of the third quarter.
7. Microchip Technology Incorporated (NASDAQ:MCHP)
Forward P/E ratio as of December 15: 13.09
Number of Hedge Fund Holders: 45
Microchip Technology Incorporated (NASDAQ:MCHP) is an American corporation that manufactures microcontrollers, mixed-signal, analog, and Flash-IP integrated circuits. The majority of the company’s revenue is generated through its MCUs, used in a variety of products such as remote controls and garage door openers.
On November 4, 2022, Timothy Arcuri, an analyst at UBS, reduced his price target on Microchip Technology Incorporated (NASDAQ:MCHP) to $90 while keeping a Buy rating on the stock. According to the analyst, the company’s Q3 result and forward guidance for Q4 were both solid, however, the concern over order cancellations is prompting him to reduce the target price on the stock.
As per Insider Monkey’s database, 45 hedge funds remained bullish on Microchip Technology Incorporated (NASDAQ:MCHP) at the end of the third quarter. Platinum Asset Management had the biggest stake in the company at the end of the third quarter.
6. NXP Semiconductors N.V. (NASDAQ:NXPI)
Forward P/E ratio as of December 15: 12.82
Number of Hedge Fund Holders: 52
NXP Semiconductors N.V. (NASDAQ:NXPI) is among the leading suppliers of high-performance mixed-signal products. NXP Semiconductors N.V. (NASDAQ:NXPI) provides microcontrollers and analog chips for automotive clusters, infotainment systems, powertrains, and radars.
On November 2, 2022, Ross Seymore, an analyst at Deutsche Bank, reduced his price target on NXP Semiconductors N.V. (NASDAQ:NXPI) to $170 while keeping a Buy rating on the stock. According to the analyst, although the company’s Q3 results were remarkable, the company is taking a cautious approach in Q4 to tackle the declining demand in its consumer segments.
As per Insider Monkey’s database, 52 hedge funds owned stakes in NXP Semiconductors N.V. (NASDAQ:NXPI) at the end of the third quarter. Citadel Investment Group remained the leading stakeholder of the company at the end of Q3 2022.
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Disclosure: None. 12 Best Semiconductor Stocks To Buy Now is originally published on Insider Monkey.
