12 Best Semiconductor Stocks To Invest In Right Now

Published on August 24, 2021 at 11:43 am by Trish Novicio in Hedge Funds, News

In this article, we discuss the 12 best semiconductor stocks to invest in right now. If you want to skip our detailed analysis of these stocks, go directly to the 5 Best Semiconductor Stocks To Invest In Right Now.

Behind every great technology and innovation of today is a powerful microchip. Despite the disruption in the global supply chain, the semiconductor industry continued to thrive in 2020, owing to the increased demand for PCs, 5G smartphones, and infrastructure products for hyperscale data centers. According to Gartner’s data, the global semiconductor revenue increased by 7.3% in 2020 to $449.8 billion, following a 12% decline in 2019. In comparison, global semiconductor sales rose 21.7% to $41.8 billion in April 2021, indicating a steady demand.

The supply of semiconductors for healthcare and technology remained consistent, while the automobile industry encountered a chip supply crisis in the first quarter of 2021. In response to the shortages, Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) has boosted its capital spending budget for 2021 to $30 billion. Shares of Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) have gained 7% in the last three months.

Meanwhile, Intel Corporation (NASDAQ: INTC), the world’s largest semiconductor company by revenue, announced in March 2021 that it would invest $20 billion in two new chip manufacturing facilities in Arizona. Patrick Gelsinger, CEO of Intel Corporation (NASDAQ: INTC), stated that a new division called Intel Foundry Services will begin producing semiconductors for other chipmakers. Shares of Intel Corporation (NASDAQ: INTC) jumped 8%, year to date.

Although supply and demand concerns have resurfaced as a result of the surge in Delta variant, Jefferies top-ranked semiconductor analyst Mark Lipacis is still very bullish on industry leaders Analog Devices, Inc. (NASDAQ: ADI), Marvell Technology, Inc. (NASDAQ: MRVL), Microchip Technology Incorporated (NASDAQ: MCHP), and NVIDIA Corporation (NASDAQ: NVDA).

The iShares PHLX SOX Semiconductor ETF has gained 21% year to date, compared to the S&P 500, which has gained 18%.

Best Semiconductor Stocks to Buy in 2021

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Our Methodology

The stocks on our list were picked based on their fundamentals and prospects for growth in the long run. We also took into account analyst ratings.

We ranked these semiconductor stocks based on the number of hedge funds having stakes in them, based on our data of over 866 hedge funds.

Why pay attention to hedge fund sentiment while choosing stocks? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

Let’s look at the 12 best semiconductor stocks to invest in right now.

Best Semiconductor Stocks To Invest In Right Now

12. Marvell Technology, Inc. (NASDAQ: MRVL)

Number of Hedge Fund Holders: 33

Marvell Technology, Inc. (NASDAQ: MRVL) is a Delaware-based semiconductor company that manufactures data infrastructure products for the automotive, data center, and enterprise market. It ranks 12th on the list of the best semiconductor stocks to invest in right now. The company’s operations outside the US are established in Israel, India, China, Singapore, Taiwan, and the Philippines.

On August 3, Marvell Technology, Inc. (NASDAQ: MRVL) announced its $1.1 billion plan of acquiring the California-based networking chip startup Innovium, which is anticipated to close by the end of 2021. Following the announcement, Deutsche Bank analyst Ross Seymore maintained a Buy rating on Marvell Technology, Inc. (NASDAQ: MRVL) and increased its price target to $70 per share from the previous $60. Shares of Marvell Technology, Inc. (NASDAQ: MRVL) jumped 5% in the last five days.

The company has a market cap of $49 billion. In the second quarter of 2021, Marvell Technology, Inc. (NASDAQ: MRVL) reported an EPS of $0.29, beating estimates by $0.02. The company’s revenue in the first quarter of the fiscal year 2022 grew 20% year over year to $832 million and beat revenue estimates by $14.91 million. The stock has gained 26%, year to date.

At the end of the first quarter of 2021, 33 hedge funds in the database of Insider Monkey held stakes worth $683 million in Marvell Technology, Inc. (NASDAQ: MRVL).

In its Q1 2021 investor letter, ClearBridge Investments mentioned Marvell Technology, Inc. (NASDAQ: MRVL) and shared their insights on the company. Here is what the fund said:

“We also purchased Marvell Technology Group, in the IT sector, a semiconductor maker with exposure to the fast-growing 5G and data center markets whose shares sold off in the latest rotation out of growth stocks. Marvell just acquired data center supplier Inphi, a name we have held in other ClearBridge portfolios, which should increase the chipmaker’s cross-selling opportunities in a strong demand environment for chips.”

11. KLA Corporation (NASDAQ: KLAC)

Number of Hedge Fund Holders: 40

KLA Corporation (NASDAQ: KLAC) sells semiconductor manufacturing products and it ranks 11th on the list of 12 best semiconductors to invest in right now. The California-based company sells cutting-edge tools that are used in producing microchips integrated into smartphones, computers, autonomous cars, AI, and space exploration.

On July 29, KLA Corporation (NASDAQ: KLAC) raised its quarterly dividend by 17%, announcing a $1.05 per share dividend. The stock has gained 13% last month.

On July 30, KLA Corporation’s (NASDAQ: KLAC) stock rose 6.1% in premarket trading after the semiconductor manufacturer reported its fiscal fourth-quarter results and received a bullish analyst rating. KLA Corporation (NASDAQ: KLAC) was upgraded to a Buy rating and a $390 price target by Needham analyst Quinn Bolton, who believes the semiconductor manufacturing company can continue to excel in the next downcycle. Similarly, on August 2, Citi analyst Atif Malik kept his Buy rating on KLA Corporation (NASDAQ: KLAC) and increased his price target to $398 per share from $380, citing robust wafer fab equipment projections of $80 billion as well as memory pricing growth in 2H 2021.

The company has a market cap of $52.3 billion. In the fourth-quarter earnings announced in July, KLA Corporation (NASDAQ: KLAC) reported an EPS of $4.43, beating estimates by $0.43. The company’s fourth-quarter revenue grew 32% year over year to $1.93 billion and beat revenue estimates by $50.6 million.

At the end of the first quarter of 2021, 40 hedge funds in the database of Insider Monkey held stakes worth $1.20 billion in KLA Corporation (NASDAQ: KLAC), up from 36 in the preceding quarter worth $925 million.

Just like Intel Corporation (NASDAQ: INTC), Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM), Analog Devices, Inc. (NASDAQ: ADI), Marvell Technology, Inc. (NASDAQ: MRVL), Microchip Technology Incorporated (NASDAQ: MCHP), and NVIDIA Corporation (NASDAQ: NVDA), KLA Corporation (NASDAQ: KLAC) is a good stock to buy according to market analysts.

10. Texas Instruments Incorporated (NASDAQ: TXN)

Number of Hedge Fund Holders: 42

Texas Instruments Incorporated (NASDAQ: TXN) is a chipmaker based in Dallas that ranks 10th on the list of 12 best semiconductor stocks to invest in right now. The semiconductor giant produces chipsets for consumer electronics manufacturers. Currently, Texas Instruments Incorporated (NASDAQ: TXN) pays an annualized dividend of $4.08 per share, up 9.7% from the previous year, and offers a dividend yield of 2.15%.

In the second quarter of 2021, the company’s revenue came in at $4.58 billion, up 41% from $3.24 billion in the same quarter in 2020. The company reported an EPS of $2.10 in the second quarter, beating estimates by $0.25. Following strong Q2 earnings, Raymond James analyst Christopher Caso maintained an Overweight rating on Texas Instruments Incorporated (NASDAQ: TXN) and increased its price target to $230 per share from the previous $220. Shares of Texas Instruments Incorporated (NASDAQ: TXN) increased 14%, year to date.

Out of the hedge funds being tracked by Insider Monkey, Ohio-based investment firm Diamond Hill Capital is a leading shareholder in Texas Instruments Incorporated (NASDAQ: TXN) with 1,170,443 shares worth more than $225 million.

9. Analog Devices, Inc. (NASDAQ: ADI)

Number of Hedge Fund Holders: 50

Analog Devices, Inc. (NASDAQ: ADI) is a microchip manufacturer based in Massachusetts that ranks 9th on the list of 12 best semiconductor stocks to invest in right now. The company sells semiconductors used in audio and video products, amplifiers, and wireless sensor networks.

In June, Analog Devices, Inc. (NASDAQ: ADI) announced a $2.5 billion sustainability revolving loan facility, with $400 million dedicated to renewable energy, green infrastructure, and environmentally friendly items for its global clients. Shares of Analog Devices, Inc. (NASDAQ: ADI) climbed 14% in the past three months.

On August 13, Oppenheimer analyst Rick Schafer maintained an Outperform rating for the stock and raised his price target to $200 per share from $175, citing the company’s growing business driven by its 5G network infrastructure system.

The company has a market cap of $62.7 billion. In the second quarter of 2021, Analog Devices, Inc. (NASDAQ: ADI) reported an EPS of $1.54, an increase of 43% year over year and beating estimates by $0.09. The company’s second-quarter revenue grew 26% year over year to $1.66 billion and beat revenue estimates by $57.29 million. The company’s industrial and automotive segments drove sales growth in the quarter, with year-over-year increases of 36% and 42%, respectively.

Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Cantillon Capital Management is a leading shareholder in Analog Devices, Inc. (NASDAQ: ADI) with 3,462,813 shares worth more than $596 million.

8. Broadcom Inc. (NASDAQ: AVGO)

Number of Hedge Fund Holders: 53

Broadcom Inc. (NASDAQ: AVGO) is a semiconductor infrastructure software solutions provider based in California and it ranks 8th on the list of 12 best semiconductor stocks to invest in right now. The company markets storage adapters, ethernet switches, fiber optic products, cybersecurity, and enterprise software worldwide. Broadcom Inc. (NASDAQ: AVGO) currently pays an annualized dividend of $14.40 per share and offers a dividend yield of 2.96%

Broadcom Inc. (NASDAQ: AVGO) saw its stock rise 2.4% on July 12 following news that it is in talks to buy SAS Institute, a privately held software company based in North Carolina, for $15 billion to $20 billion, according to The Wall Street Journal. The stock has gained 4% in the previous month.

On July 6, Citi analyst Christopher Danely maintained a Buy rating on Broadcom Inc. (NASDAQ: AVGO) with a price target of $528 per share, emphasizing the company’s dominant market position is mainly attributable to its technological leadership.

The company has a market cap of $199 billion. In the second quarter of 2021, Broadcom Inc. (NASDAQ: AVGO) reported an EPS of $6.62, beating estimates by $0.16. The company’s second-quarter revenue grew 15% year over year to $6.61 billion and beat revenue estimates by $103.58 million. Shares of Broadcom Inc. (NASDAQ: AVGO) increased 11%, year to date.

At the end of the first quarter of 2021, 53 hedge funds in the database of Insider Monkey held stakes worth $3.31 billion in Broadcom Inc. (NASDAQ: AVGO).

Along with Intel Corporation (NASDAQ: INTC), Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM), Analog Devices, Inc. (NASDAQ: ADI), Marvell Technology, Inc. (NASDAQ: MRVL), Microchip Technology Incorporated (NASDAQ: MCHP), and NVIDIA Corporation (NASDAQ: NVDA), Broadcom Inc. (NASDAQ: AVGO) is one of the best semiconductor stocks to invest in right now according to stock market analysts.

In its Q2 2021 investor letter, of ClearBridge Investments, ClearBridge Investments mentioned Broadcom Inc. (NASDAQ: AVGO) and discussed its stance on the firm. Here is what the fund said:

“A good way to conceptualize how we think about portfolio construction is to picture a pyramid. At the bottom of the pyramid are the durable compounding growth companies that form the strong foundation, resilience, and consistency for the Strategy. We think these companies should comprise just under half of the portfolio assets and feature annual revenue growth rates ranging from two times GDP up to 20% as well as healthy free cash flow generation.

Broadcom has delivered similar long-term appreciation through a combination of organic growth, capital deployment into new and adjacent opportunities through merger and acquisition activity as well as returning capital to shareholders through buybacks and dividends.”

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

Number of Hedge Fund Holders: 53

NXP Semiconductors N.V. (NASDAQ: NXPI) ranks 7th on the list of 12 best semiconductor stocks to invest in right now. The company is based in the Netherlands and manufactures semiconductors utilized in various market applications such as automotive, communication infrastructure, industrial, mobile, smart city, and smartphone. NXP Semiconductors N.V. (NASDAQ: NXPI) currently pays an annualized dividend of $2.25 per share and offers a dividend yield of 1.05%.

In July, NXP Semiconductors N.V. (NASDAQ: NXPI) and MOTER Technologies, Inc., a California-based insurtech firm, teamed together to build a secure data platform to improve vehicle insurance services using NXPI’s processors. Shares of NXP Semiconductors N.V. (NASDAQ: NXPI) jumped 13% in the previous month.

On August 4, Truist analyst William Stein maintained a Buy rating on NXP Semiconductors N.V. (NASDAQ: NXPI) and raised its price target to $244 per share from $233, referencing the company’s strong Q2 performance and “even better” outlook. Similarly, Deutsche Bank analyst Ross Seymore kept a Buy rating on Semiconductors N.V. (NASDAQ: NXPI) and increased its price target to $235 per share from $225 previously.

The company has a market cap of $57 billion. In the second quarter of 2021, NXP Semiconductors N.V. (NASDAQ: NXPI) reported an EPS of $2.39, beating estimates by $0.07. The company’s second-quarter revenue grew 42.9% year over year to $2.6 billion and beat revenue estimates by $19.51 million. The stock has gained 35%, year to date.

At the end of the first quarter of 2021, 53 hedge funds in the database of Insider Monkey held stakes worth $1.71 billion in NXP Semiconductors N.V. (NASDAQ: NXPI).

Along with Intel Corporation (NASDAQ: INTC), Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM), Analog Devices, Inc. (NASDAQ: ADI), Marvell Technology, Inc. (NASDAQ: MRVL), Microchip Technology Incorporated (NASDAQ: MCHP), and NVIDIA Corporation (NASDAQ: NVDA), NXP Semiconductors N.V. (NASDAQ: NXPI) is one of the best semiconductor stocks to invest in right now according to stock market analysts.

6. Lam Research Corporation (NASDAQ: LRCX)

Number of Hedge Fund Holders: 54

Lam Research Corporation (NASDAQ: LRCX) is a semiconductor technology provider and it ranks 6th on the list of 12 best semiconductor stocks to invest in right now. The company sells semiconductor products worldwide.

In early August, Lam Research Corporation (NASDAQ: LRCX) opened its largest semiconductor manufacturing plant in Batu Kawan, Malaysia, increasing its global production capacity. Shares of Lam Research Corporation (NASDAQ: LRCX) increased 23%, year to date.

On July 29, Mizuho analyst Vijay Rakesh maintained a Buy rating on Lam Research Corporation (NASDAQ: LRCX) and increased its price target to $725 from the previous $705 after the semiconductor company posted solid Q2 results.

The company has a market cap of $82.7 billion. In the second quarter of 2021, Lam Research Corporation (NASDAQ: LRCX) reported an EPS of $8.09, beating estimates by $0.48. The company’s second-quarter revenue grew 8% quarter over quarter to $4.15 billion and beat revenue estimates by $116.62 million.

At the end of the first quarter of 2021, 54 hedge funds in the database of Insider Monkey held stakes worth $3.16 billion in Lam Research Corporation (NASDAQ: LRCX), down from 56 in the preceding quarter worth $2.61 billion.

Along with Intel Corporation (NASDAQ: INTC), Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM), Analog Devices, Inc. (NASDAQ: ADI), Marvell Technology, Inc. (NASDAQ: MRVL), Microchip Technology Incorporated (NASDAQ: MCHP), and NVIDIA Corporation (NASDAQ: NVDA), Lam Research Corporation (NASDAQ: LRCX) is one of the best semiconductor stocks to invest in right now according to stock market analysts.

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