15 Best Semiconductor Stocks to Buy Now

Published on July 12, 2021 at 2:52 pm by Vardah Gill in Hedge Funds, News

In this article we will take a look at the 15 best semiconductor stocks to buy now. You can skip our detailed analysis of the semiconductor industry’s outlook for 2021, and go directly to the 5 Best Semiconductor Stocks to Buy Now.

Semiconductor chips have a soaring demand in today’s world as they are used in almost all the smart devices that we use. There are over 750 semiconductor companies globally, manufacturing chips for cars, smartphones, machines, computers, gaming devices, etc. These chips are also used in the machines that mine cryptocurrency around the world. The semiconductor industry significantly contributes to modern technology and is certainly becoming one of the top choices of investors.

According to World Semiconductor Trade Statistics WSTS, the global semiconductor market is expected to grow by 19.7% in 2021 at $527 billion and will grow by 8.8% in 2022. The U.S. is home to some of the biggest semiconductor companies in the world, including Intel Corporation (NASDAQ: INTC), NVIDIA Corporation (NASDAQ: NVDA), and QUALCOMM Incorporated (NASDAQ: QCOM). These companies have been global leaders in the industry for decades and also contribute significantly to the national economy. In 2021, the semiconductor industry in the U.S. is expected to grow by 11.1%.

Asia Pacific is the biggest market for semiconductors globally, with China dominating the region. According to Deloitte, Asia Pacific accounts for over 60% of global semiconductor sales, 30% of which are driven by China. Also, in 2021, the region’s semiconductor industry is predicted to grow by 23.5%. Taiwan is also a hub of IT-related devices and produces over 70% of global IT products. Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) is one of the leading companies based in Taiwan and also dominates the semiconductor foundry market.

Bank of America also expects the semiconductor industry to show growth this year. The investment bank has released its top semiconductor stock picks owing to their paramount importance in the eyes of investors. Advanced Micro Devices, Inc. (NASDAQ: AMD), Analog Devices, Inc. (NASDAQ: ADI), and Broadcom Inc. (NASDAQ: AVGO) are a few of the stocks that have the potential to gain in 2021, according to the bank. BofA analyst Vivek Arya rated these stocks as a ‘Buy’ for the next half of the year.

The onset of Covid-19 put a lot of strain on the semiconductor industry, causing major companies to shut down their manufacturing processes. The pandemic-driven distorted supply chains resulted in the global shortage of semiconductors which could certainly last till 2023, according to analysts. The auto industry suffered the most amongst all. Goldman Sachs reports the global car industry will face a loss of over $20 billion in operating profit in 2021. However, the companies are investing to meet the demand for microchips as the world is getting back to normal. Recently, Intel Corporation (NASDAQ: INTC) and Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) have announced a joint investment of $48 billion for producing more chips.

In the first six months of 2021, the semiconductor stocks soared by 20% due to the high demand and shortage. The industry is projecting more growth this year as microchip giants like Advanced Micro Devices, Inc. (NASDAQ: AMD), Analog Devices, Inc. (NASDAQ: ADI), and Broadcom Inc. (NASDAQ: AVGO), along with other companies, have formed a Semiconductors in America Coalition. The aim of the coalition is to demand a $50 billion budget from Congress for manufacturing and research of semiconductors.

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Though the semiconductor industry faced disruptive operations due to the pandemic and chip shortage, the overall performance of the industry remained intact. According to the Semiconductor Industry Association, global semiconductor sales showed 6.5% year-over-year growth at $439 billion in 2020. Moreover, the demand for data and services is nowhere near the end, so the future of this industry holds good prospects.

But investing is becoming difficult by the day, even for the smart money. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, 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 February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. 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.

With these aspects in mind, let’s start our list of the 15 best semiconductor stocks to buy now. We chose these stocks based on hedge fund sentiment, analysts’ ratings, future growth potential and fundamental strengths.

Best Semiconductor Stocks to Buy Now

15. Skyworks Solutions, Inc. (NASDAQ: SWKS)

Number of Hedge Fund Holders: 33

Skyworks Solutions, Inc. (NASDAQ: SWKS) is a California-based semiconductor company that manufactures wireless network products, including detectors, circulators, amplifiers, etc. It ranks fifteenth on our list of the best semiconductor stocks to buy now.

In Q2 2021, Skyworks Solutions, Inc. (NASDAQ: SWKS) reported a net income of $395 million, up from $229 million during the same period last year. The EPS for the quarter stood at $2.37, beating the market estimate of $2.35. Skyworks Solutions, Inc. (NASDAQ: SWKS) has grown by 45.5% in the past year and 26.9% year to date. Recently, Barclays raised the price target on the stock to $200, ranking it as ‘Equal Weight’.

Like QUALCOMM Incorporated (NASDAQ: QCOM), Micron Technology, Inc. (NASDAQ: MU), NVIDIA Corporation (NASDAQ: NVDA), Intel Corporation (NASDAQ: INTC), Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) and Analog Devices, Inc. (NASDAQ: ADI), Skyworks Solutions, Inc. (NASDAQ: SWKS) is one of the best semiconductor stocks to buy now.

At the end of Q1 2021, 33 hedge funds tracked by Insider Monkey have stakes in Skyworks Solutions, Inc. (NASDAQ: SWKS), worth $765 million. AQR Capital Management is the biggest shareholder of the company with 1.5 million shares, worth $283 million.

Semper Augustus Investments Group released its fourth-quarter 2020 investor letter and mentioned Skyworks Solutions, Inc. (NASDAQ: SWKS) in it and other stocks. Here is what the firm has to say:

“Analog semiconductor manufacturer Skyworks was also completely liquidated. The stock had reached our appraisal of fair value early in the year and then fell by half, back to our cost basis in March. Worried about the duration of loss of demand in consumer electronics and having better opportunities, we sold the Skyworks position, wanting the cash for deployment elsewhere. Skyworks was sold at approximately our original cost basis, all of the prior gain evaporated. The Skyworks sale was boneheaded, as the shares not only doubled back to their highs but continued higher from there. That the proceeds were invested well doesn’t remedy that the sale was of too good of a company at way too low a price. Opportunity cost in this case was opportunity lost.”

14. Kulicke and Soffa Industries, Inc. (NASDAQ: KLIC)

Number of Hedge Fund Holders: 34

Kulicke and Soffa Industries, Inc. (NASDAQ: KLIC) is a Singaporean company that mainly produces semiconductors, LED, and electronic devices. These devices provide solutions in automotive, communications, industrial, and computing markets. Along with Singapore, the company opened its Demo Center in China in 2018.

In the second quarter of 2021, Kulicke and Soffa Industries, Inc. (NASDAQ: KLIC) reported a net income of $79.4 million, showing 367% year-over-year growth. The EPS stood at $1.26, beating the market consensus of $1.14. Kulicke and Soffa Industries, Inc. (NASDAQ: KLIC) has grown massively by 170.8% in the past year and 83.5% year to date. The company also declared a quarterly dividend of $0.14 per share. In April, Needham & Company LLC rated the stock as a ‘Buy’ and raised the price target to $64.

As of Q1 2021, 34 hedge funds tracked by Insider Monkey have positions in Kulicke and Soffa Industries, Inc. (NASDAQ: KLIC), worth $428 million.

13. ASML Holding N.V. (NASDAQ: ASML)

Number of Hedge Fund Holders: 35

ASML Holding N.V. (NASDAQ: ASML) is a Dutch company that deals in photolithography systems specifically for the semiconductor industry. Computational lithography is the leading segment of the company which determines the quality of microchips. ASML Holding N.V. (NASDAQ: ASML) has operations in over 16 countries with around 29,000 employees.

In Q1 2021, ASML Holding N.V. (NASDAQ: ASML) showed promising results due to the strong market demand of DUV and EUV lithography. ASML Holding N.V. (NASDAQ: ASML) recorded a net income of €1.3 billion, up from €391 million during the same period last year. The EPS also beat the market consensus by $0.83 and stood at $3.85. The company has been in the eyes of the investors due to the growing EUV demand. Earlier in April, Cowen raised the price target on the stock to €550, rating it as ‘Outperform’.

At the end of Q1 2021, we see that the number of hedge funds positions increased to 35 in ASML Holding N.V. (NASDAQ: ASML), compared with 30 funds in the previous quarter. Fisher Asset Management remained the biggest shareholder of the company with 3.9 million shares, worth $2.4 billion.

ClearBridge Investments recently released its Q1 2021 investor letter and mentioned ASML Holding N.V. (NASDAQ: ASML) in it. Here is what the firm has to say:

“While we maintain high conviction in many of the emerging and secular growth names in the portfolio, despite the short-term headwinds created by the current reflationary environment,– we continue to hold ASML, the leader in semi cap equipment for high-end chips. Semiconductor shortages, caused by a combination of years of capacity reductions, COVID-19 lockdowns and better than expected rebounds in industries like autos, will cause short-term revenue pressure but are allowing companies to exert pricing power as they race to replenish depleted inventories.”

12. Microchip Technology Incorporated (NASDAQ: MCHP)

Number of Hedge Fund Holders: 42

Microchip Technology Incorporated (NASDAQ: MCHP) is an American semiconductor company and ranks twelfth on our list of the best semiconductor stocks to buy now. The products manufactured by the company are used in automotive, communications, industrial, and computing markets.

In Q4 FY 2021, Microchip Technology Incorporated (NASDAQ: MCHP) recorded a net income of $521 million, compared to $375.5 million during the same period last year. Microchip Technology Incorporated (NASDAQ: MCHP) recorded an EPS above consensus by $0.11 at $1.85. For Q1, Microchip Technology Incorporated (NASDAQ: MCHP) expects revenue of $1.51-$1.57 billion, beating the consensus of $1.5 billion. It increased its quarterly dividend by 5.9% at $0.413. The MCHP stock gained 37.5% in the past year. The stock also delivered a 43.3% return last year. In May, Morgan Stanley raised its price target to $177, rating it as ‘Overweight’.

At the end of the first quarter, 42 hedge funds tracked by Insider Monkey have positions in Microchip Technology Incorporated (NASDAQ: MCHP). The total value of these stakes is $962 million.

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

Number of Hedge Fund Holders: 50

Analog Devices, Inc. (NASDAQ: ADI) ranks eleventh on our list of the best semiconductor stocks to buy now. It is an American semiconductor company that manufactures analog and mixed signals circuits used in a wide range of electronic devices. The products manufactured by Analog Devices, Inc. (NASDAQ: ADI) are used by over 100,000 customers worldwide.

In Q2 FY21, Analog Devices, Inc. (NASDAQ: ADI) generated a revenue of $1.66 billion, up from $1.31 billion during the same period last year. The revenue showed a 26% year-over-year growth, massively driven by industrial and automotive segments. The EPS stood at $1.54, beating the market estimate of $1.45. Analog Devices, Inc. (NASDAQ: ADI) also returned over $440 million through dividends and declared a quarterly dividend of $0.69 per share. Analog Devices, Inc. (NASDAQ: ADI) has also shown consistent growth over the period of time, gaining 38% in the past year. For Q3, Analog Devices, Inc. (NASDAQ: ADI) expects revenue to reach $1.7 billion, with an EPS of $1.61. Recently, Needham & Company LLC set a price target on ADI stock of $195, rating the stock as ‘Buy’.

Like QUALCOMM Incorporated (NASDAQ: QCOM), Micron Technology, Inc. (NASDAQ: MU), NVIDIA Corporation (NASDAQ: NVDA), Intel Corporation (NASDAQ: INTC) and Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM), Analog Devices, Inc. (NASDAQ: ADI) is one of the best semiconductor stocks to buy now.

At the end of Q1 2021, 50 hedge funds tracked by Insider Monkey have positions in Analog Devices, Inc. (NASDAQ: ADI), worth $4.8 billion. The biggest stakeholder of the company is Generation Investment Management, with 5.4 million shares, worth $851 million.

Weitz Investment management published its Q4 2020 investor letter and mentioned Analog Devices, Inc. (NASDAQ: ADI). Here is what the firm has to say:

“Analog Devices benefited from several global, long-wave trends such as automation, electric vehicles and the 5G network build-out. The company’s quarterly sales into the auto, industrial and communications sectors exceeded expectations, giving the stock a lift.”

10. Broadcom Inc. (NASDAQ: AVGO)

Number of Hedge Fund Holders: 53

Broadcom Inc. (NASDAQ: AVGO) stands tenth on our list of the best semiconductor stocks to buy now. It is an American developer and manufacturer of semiconductors and infrastructure software solutions. The products offer services in several markets, including industrial, networking, software, etc.

In Q2 FY21, Broadcom Inc. (NASDAQ: AVGO) reported a net income of $2.9 billion, up from $2.3 billion during the same period last year. The EPS for the quarter stood at $6.62, beating the market estimate of $6.42. Broadcom Inc. (NASDAQ: AVGO) shares have gained over 50% in the past year and 12% in the past six months. Earlier in June, Jefferies Group raised its price target on the stock to $550 from $520 and JP Morgan raised the price target to $570. In Q2, Broadcom Inc. (NASDAQ: AVGO) generated a revenue of $6.6 billion and expects to see a 16% gain in revenue in Q3 at $6.75 billion.

At the end of Q1 2021, 53 hedge funds tracked by Insider Monkey have stakes in Broadcom Inc. (NASDAQ: AVGO). The total value of these stakes is $3.3 billion.

Like Micron Technology, Inc. (NASDAQ: MU), Kulicke and Soffa Industries, Inc. (NASDAQ: KLIC), NXP Semiconductors N.V. (NASDAQ: NXPI), and QUALCOMM Incorporated (NASDAQ: QCOM), Broadcom Inc. (NASDAQ: AVGO) is one of the best semiconductor stocks to buy now.

ClearBridge Investments has mentioned Broadcom Inc. (NASDAQ: AVGO) in its first-quarter 2021 investor letter. Here is what the investment management firm has to say:

“Our high active share approach made the most difference in IT, where the portfolio’s holdings gained 4.5% compared to a loss for the benchmark. Results were led by our more cyclical positions in chipmaker and security software supplier Broadcom.”

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

Number of Hedge Fund Holders: 53

NXP Semiconductors N.V. (NASDAQ: NXPI) is a semiconductor company based in the Netherlands. The company produces software and system solutions that enhance the sensory experiences of customers. The products are used in mobile phones, media players, TVs, and other electronic devices. NXP Semiconductors N.V. (NASDAQ: NXPI) has operations in 30 countries with over 29,000 employees.

In Q1 2021, net income for NXP Semiconductors N.V. (NASDAQ: NXPI) stood at $832 million, up from $607 million during the same period last year. The EPS beat the market estimate by $0.10 and was recorded at $2.31. NXP Semiconductors N.V. (NASDAQ: NXPI) has grown by 80% in the past year and 25% year to date. In May, Wells Fargo added NXP Semiconductors N.V. (NASDAQ: NXPI) to its signature picks and rated the stock ‘Overweight’. In its quarterly report, the company announced a payment of $1.0 billion to shareholders through dividends and shares repurchased in Q1.

At the end of Q1 2021, 53 hedge funds tracked by Insider Monkey have positions in NXP Semiconductors N.V. (NASDAQ: NXPI), worth $1.7 billion.

Like NVIDIA Corporation (NASDAQ: NVDA), Applied Materials, Inc. (NASDAQ: AMAT), Microchip Technology Incorporated (NASDAQ: MCHP), and Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM), NXP Semiconductors N.V. (NASDAQ: NXPI) is one of the best semiconductor stocks to buy now.

ClearBridge Investments, an investment management firm, recently released its first-quarter 2021 investor letter and mentioned NXP Semiconductors N.V. (NASDAQ: NXPI) in it. Here is what the fund said:

“Within IT, we have also increased exposure to a cyclical semiconductor industry currently working through a severe supply shortage due to several years of capacity reductions, COVID-19 shutdowns and one-off production delays as well as demand resilience in areas like autos and smartphones. Two recent additions, specialty semiconductor maker NXP Semiconductors and semiconductor capital equipment firm ASML also delivered strong performance in the first quarter. NXP rose as auto production ramped up and electric vehicle sales continued to expand. ASML, which operates in a virtual monopoly for high-end chipmaking equipment, began to exert pricing power as it works through an order backlog that has stretched to over a year. Both are Dutch-based companies and out-of-benchmark names that provide access to different growth profiles than are available in the U.S. The main risk for semiconductors is short-term revenue pressure until capacity catches up with demand, which hurt wireless chipmaker Qualcomm. Looking past current constraints, we expect the industry to see a strong second half and solid growth in 2022.”

8. Maxim Integrated Products, Inc. (NASDAQ: MXIM)

Number of Hedge Fund Holders: 55

Maxim Integrated Products, Inc. (NASDAQ: MXIM) is a semiconductor company in California that deals with integrated circuits, especially analog and mixed-signal. The products manufactured by the company are used in industrial, consumer, and automotive markets.

In Q3 FY21, Maxim Integrated Products, Inc. (NASDAQ: MXIM) reported a net income of $220 million, up from $161 million during the same period last year. The EPS for the quarter also beat the market estimate by $0.07 and stood at $0.82. Moreover, the company saw an 18% year-over-year growth in revenue at $665 million. Maxim Integrated Products, Inc. (NASDAQ: MXIM) soared by over 73% in the past year and 18% year to date. Earlier in May, Bernstein raised the price target on MXIM stock to $185 and also upgraded it to ‘Outperform’. In the past year, the stock has delivered a 74.6% return to the shareholders.

At the end of Q1 2021, 55 hedge funds tracked by Insider Monkey have positions in Maxim Integrated Products, Inc. (NASDAQ: MXIM), worth $3.2 billion.

Like NVIDIA Corporation (NASDAQ: NVDA), Applied Materials, Inc. (NASDAQ: AMAT), Microchip Technology Incorporated (NASDAQ: MCHP), and Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM), Maxim Integrated Products, Inc. (NASDAQ: MXIM) is one of the best semiconductor stocks to buy now.

7. Advanced Micro Devices, Inc. (NASDAQ: AMD)

Number of Hedge Fund Holders: 62

Advanced Micro Devices, Inc. (NASDAQ: AMD) is a California-based semiconductor company that manufactures high-performance computing and visualization products. The products are manufactured for technology-related businesses or consumer markets. With operations around the world, Advanced Micro Devices, Inc. (NASDAQ: AMD) has manufacturing facilities in Malaysia and China.

In Q1 2021, Advanced Micro Devices, Inc. (NASDAQ: AMD) reported a net income of $642 million, up from $222 million during the same period last year, showing 189% year-over-year growth. The EPS is recorded at $0.52, beating the market estimate of $0.44. The AMD stock has gained 76% in the past year and 14% in the past month. Moreover, the stock has delivered a 76.5% return last year. In May, JP Morgan raised the price target on the stock to $105 from $100.

In May 2021, Advanced Micro Devices, Inc. (NASDAQ: AMD) was one of the top picks by hedge fund managers with the ownership of 24.7%. At the end of the first quarter, 62 hedge funds tracked by Insider Monkey have positions in Advanced Micro Devices, Inc. (NASDAQ: AMD), worth $3.7 billion.

Like NVIDIA Corporation (NASDAQ: NVDA), Micron Technology, Inc. (NASDAQ: MU), Intel Corporation (NASDAQ: INTC), Maxim Integrated Products, Inc. (NASDAQ: MXIM), and Analog Devices, Inc. (NASDAQ: ADI), Advanced Micro Devices, Inc. (NASDAQ: AMD) is one of the best semiconductor stocks to buy now.

6. QUALCOMM Incorporated (NASDAQ: QCOM)

Number of Hedge Fund Holders: 73

QUALCOMM Incorporated (NASDAQ: QCOM) is a California-based technology company that manufactures and markets semiconductors, wireless devices, operators, etc. The company ranks sixth on our best semiconductor stocks to buy now. QUALCOMM Incorporated (NASDAQ: QCOM) has recently launched its smartphone processors to boost its AI capacity.

In Q2 FY21, QUALCOMM Incorporated (NASDAQ: QCOM) reported a net income of $2.1 billion, up from $1.01 billion during the same period last year, showing 115% year-over-year growth. The EPS stood at $1.90, beating the market estimate of $1.67. Handset chips and 5G networks remained the main source of revenue this quarter. The QCOM stock has gained 59.4% in the past year. The company expects revenue of around $7.9 billion, with EPS of $1.55-$1.75 in the upcoming quarter. In June, KGI Securities initiated its coverage of QCOM with the price target of $175 and an ‘Outperform rating.

QUALCOMM Incorporated (NASDAQ: QCOM) returned $2.3 billion to stockholders in the second quarter, including a quarterly dividend of $0.65 per share or $734 million. At the end of Q1 2021, 73 hedge funds tracked by Insider Monkey have positions in QUALCOMM Incorporated (NASDAQ: QCOM), worth $2.7 billion.

Like NVIDIA Corporation (NASDAQ: NVDA), Micron Technology, Inc. (NASDAQ: MU), Intel Corporation (NASDAQ: INTC), Maxim Integrated Products, Inc. (NASDAQ: MXIM), and Analog Devices, Inc. (NASDAQ: ADI), QUALCOMM Incorporated (NASDAQ: QCOM) is one of the best semiconductor stocks to buy now.

ClearBridge Investments has published its Q1 2021 investor letter and mentioned QUALCOMM Incorporated (NASDAQ: QCOM) and other stocks. Here is what the investment management firm has to say:

“Within IT, we have also increased exposure to a cyclical semiconductor industry currently working through a severe supply shortage due to several years of capacity reductions, COVID-19 shutdowns and one-off production delays as well as demand resilience in areas like autos and smartphones. The main risk for semiconductors is short-term revenue pressure until capacity catches up with demand, which hurt wireless chipmaker Qualcomm. Looking past current constraints, we expect the industry to see a strong second half and solid growth in 2022.”

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