In this article, we discuss the 5 best semiconductor stocks to buy now. If you want to find out about more stocks and the industry in general, check out 13 Best Semiconductor Stocks to Buy Now.
5. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 72
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the world’s largest contract chip manufacturer. The company is responsible for manufacturing chips for some of the largest technology firms in the world, and it is headquartered in Hsinchu, Taiwan.
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the leading chip manufacturing company in the world when it comes to manufacturing technology. Through remarkable progress over the past couple of years, its technologies are now nearing parity with those of U.S. chip giant Intel Corporation (NASDAQ:INTC) in terms of feature density and performance. Its revenues have grown by 48% between 2019 and 2021 and the firm generated a massive $9.8 billion in free cash flows last year. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) also pays a 59 cent dividend for a 3% yield.
Daiwa, known for its conservative estimates, upgraded Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)’s share price target to NT$645 from $NT550 in September 2022 as it estimated the firm to deliver strong revenue growth this year. 72 out of the 895 hedge funds polled by Insider Monkey for their Q2 2022 holdings had held a stake in the company.
Out of these, Ken Fisher’s Fisher Asset Management is Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)’s largest investor. It owns 26 million shares that are worth $2 billion.
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.”
4. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 84
NVIDIA Corporation (NASDAQ:NVDA) is one of the largest semiconductor firms in the world, and one that is widely credited to have invented the modern day graphics processing unit (GPU). A GPU is a chip that aids a computer’s CPU in performing visual computing tasks such as rendering.
NVIDIA Corporation (NASDAQ:NVDA) is one of the heaviest spenders in capital expenditures in the industry, with its CapEx standing at a cool $433 million this year. Since the firm is primarily a chip designer, it does not have to invest heavily to sustain its operations. Therefore, a large chunk of this investment goes into growth, which then accretes into earnings down the road. NVIDIA Corporation (NASDAQ:NVDA)’s current price to earnings ratio of 47x offers it a strong valuation premium to both AMD and the broader NASDAQ 100.
Evercore ISI kept a $225 price target for NVIDIA Corporation (NASDAQ:NVDA) in September 2022, stressing that the firm will negate downsides through its strong product pipeline. 84 out of the 895 hedge fund portfolios analyzed by Insider Monkey during Q2 2022 had bought the company’s shares.
NVIDIA Corporation (NASDAQ:NVDA)’s largest investor in our database is Ken Fisher’s Fisher Asset Management which owns 7.5 million shares that are worth $1.1 billion.
Baron Funds mentioned the company in its Q2 2022 investor letter and outlined that:
“At the company-specific level, there was a broad correction across the entire portfolio. While four of our holdings contributed to performance, the contribution to absolute returns was less than 100bps combined, as unfortunately none of them were large enough to move the needle. We had 16 investments detracting over 100bps each with NVIDIA (NASDAQ:NVDA), our second largest detractor, costing the Fund 254bps.
NVIDIA’s stock was hit even harder, down 44.4%, impacted by concerns over the health of the consumer, dramatic declines in crypto, and COVID-related lockdowns in China. Despite the sell-off and the increased near-term volatility in its gaming business, NVIDIA’s revenues grew 46% year-over-year with 48% operating margins, driven by continued strength in its data center business as companies across industries adopt AI and ML…” (Click here to see the full text)
3. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 87
Advanced Micro Devices, Inc. (NASDAQ:AMD) is an American company that designs several kinds of semiconductor products. These include central processing units (CPUs) for desktops, notebooks, and datacenters, and GPUs for casual, professional, and enterprise users.
Advanced Micro Devices, Inc. (NASDAQ:AMD) is currently the darling of the technology industry as it continues to post consecutive quarterly growths through introducing advanced products in the market to effectively compete with its larger rival Intel Corporation. The firm’s second quarter results saw it post record revenues once again through 70% annual growth and at the same time, it gained market share in the crucial data center market.
Stifel set a $122 share price target for Advanced Micro Devices, Inc. (NASDAQ:AMD) in September 2022, stating that the company has a strong product portfolio and is at par with Intel. Insider Monkey’s 895 hedge fund study for this year’s second quarter saw 87 as having bought the company’s shares.
Advanced Micro Devices, Inc. (NASDAQ:AMD)’s largest investor is Ken Fisher’s Fisher Asset Management which owns 25 million shares that are worth $1.9 billion.
2. Alphabet Inc. (NASASQ:GOOGL)
Number of Hedge Fund Holders: 191
Alphabet Inc. (NASDAQ:GOOGL) is one of the largest technology companies in the world that rose to fame through its internet search engine Google. The company also has a host of other software and hardware products, such as Gmail, YouTube, Pixel smartphones, and a robot.
Alphabet Inc. (NASDAQ:GOOGL) won a big contract from the United States Department of Commerce in September 2022 to design chips that researchers can use to develop semiconductors and nanotechnology. This made the company one of the first beneficiaries of the U.S. Chips Act passed by Congress earlier this year to jumpstart U.S. chipmaking dominance. Alphabet Inc. (NASDAQ:GOOGL) also designs its own chips for the Pixel smartphones and plans to expand this to its Chromebook notebook lineup.
191 out of the 895 hedge funds part of Insider Monkey’s Q2 2022 survey had held a stake in Alphabet Inc. (NASDAQ:GOOGL).
Out of these, Chris Hohn’s TCI Fund Management is Alphabet Inc. (NASDAQ:GOOGL)’s largest investor through a $5.4 billion stake that comes via 2.4 million shares.
Baron Funds mentioned the company in its Q2 2022 investor letter and stated that:
“Alphabet Inc. is the parent company of Google, the world’s largest search and online advertising company. Shares of Alphabet declined 21.6% in the quarter due to concerns about slower global growth impacting the company’s core advertising business. We retain conviction in Alphabet’s merits as it continues to benefit from growth in mobile and online video advertising, which accrues to its core assets of search, YouTube, and the Google ad network. We are further encouraged by Alphabet’s investments in Cloud, AI, and Autonomous Driving (through its Waymo subsidiary).”
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 252
Amazon.com, Inc. (NASDAQ:AMZN) is one of the world’s largest electronic commerce retailers and since being set up in the late 1990s, it has expanded its business to now offer gadgets, cloud computing solutions, and even satellite internet.
Amazon.com, Inc. (NASDAQ:AMZN) designs its own chips for datacenter services for its Amazon Web Services division. These chips are developed under the Graviton lineup and they are designed through British design house Arm Ltd’s microarchitecture. The latest Graviton chip, Graviton2, is built on the Taiwan Semiconductor Manufacturing Company’s (NYSE:TSM) 7nm manufacturing process and is made up of 30 billion transistors – making it one of the most advanced chips in the world.
Out of the 895 hedge funds polled by Insider Monkey for their holdings covering this year’s second quarter, 252 had bought Amazon.com, Inc. (NASDAQ:AMZN)’s shares.
Amazon.com, Inc. (NASDAQ:AMZN)’s largest investor in our database is Ken Fisher’s Fisher Asset Management which owns 48.6 million shares that are worth $5.2 billion.
Baron Funds mentioned the company in its Q2 2022 investor letter and stated that:
“Amazon.com, Inc. (NASDAQ:AMZN) is the world’s largest retailer and cloud services provider. Shares of Amazon declined 35% in the quarter due to weaker-than-expected profits resulting from an overcapacity of resources coming out of COVID. We expect Amazon to grow into its retail capacity in the quarters to come, which would enable it to improve profitability accordingly. Amazon remains one of our largest holdings due to its durable competitive advantages with a leading position in multiple trillion-dollar markets with a long runway for growth.
According to the U.S. Census Bureau, domestic e-commerce was only 14.3% of retail as of the first quarter of 2022. Internationally, the opportunity is even earlier as Amazon has still less than 2% market share of international retail spending. Its advertising share is roughly 3% and growing, underpinned by its structural closed loop, which enables accurate targeting and measurement.
Lastly, Amazon Web Services or AWS, remains the leading cloud provider, while cloud computing still represents only 9.5% out of the $4.3 trillion of global IT spending according to Gartner. Areas such as logistics and health care present additional optionality.”
Disclosure: None. You can also take a look at 10 Best Websites To Research Stocks and Top 10 Technology Stocks to Buy According to Billionaire Cliff Asness.
