In this article we discuss the 5 best semiconductor stocks to buy now. If you want to read our detailed analysis of the semiconductor industry, go directly to the 15 Best Semiconductor Stocks to Buy Now.
5. Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM)
Number of Hedge Fund Holders: 76
Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) is a multinational semiconductor corporation with production facilities in Taiwan and China. The semiconductor products manufactured by the company can be used in the industrial, automotive, electronic, and telecom industries. Recently, Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) has announced plans to expand its chipmaking facilities and plans to build one in Arizona, worth $12 billion.
In Q1 2021, Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) reported a net income of NT$139.6 billion, showing a 19.4% year-over-year growth. The EPS for the quarter stood at $0.96, beating the market estimate of $0.94. The TSM stock saw its low of $44 in March 2020 due to the global market crash but is right on track, gaining 112% in the past year and 13.2% in the past six months. According to analysts, Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) is certainly going to benefit from the iPhone sales, as the company has already started delivering chips for the next iPhone model. In June, Argus initiated its coverage of TSM with a Buy rating and $150.
At the end of Q1 2021, 76 hedge funds tracked by Insider Monkey have stakes in Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM), up from 72 in the previous quarter. The total value of these stakes is $10.8 billion.
ClearBridge Investments released its Q1 2021 investor letter and mentioned Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) and other stocks 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,– we continue to hold Taiwan Semiconductor, the world’s largest foundry. 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.”
4. Applied Materials, Inc. (NASDAQ: AMAT)
Number of Hedge Fund Holders: 78
Applied Materials, Inc. (NASDAQ: AMAT) is an American manufacturing company that produces software and equipment mainly used for semiconductor chips. The company has over 24,000 employees in 19 countries and is headquartered in Silicon Valley.
In Q2 FY21, Applied Materials, Inc. (NASDAQ: AMAT) reported a net income of $1.5 billion, up from $1.2 billion in the previous quarter. The EPS also beat the market estimate of $1.51 and stood at $1.63. The AMAT stock gained 139.5% in the past year and 67.8% in the past six months. The company also declared a quarterly dividend of $0.24 per share. In Q3, Applied Materials, Inc. (NASDAQ: AMAT) expects net sales to reach $5.9 billion, with $1.70-$1.82 EPS. The company attributes the productive quarter to its semiconductor business. In May, JP Morgan raised its price target to $160 and maintains an “Overweight” rating.
The data from Q1 2021 tells us that hedge funds are turning bullish on Applied Materials, Inc. (NASDAQ: AMAT), as 78 funds have positions in the company, up from 61 in the previous quarter.
3. NVIDIA Corporation (NASDAQ: NVDA)
Number of Hedge Fund Holders: 80
NVIDIA Corporation (NASDAQ: NVDA) is third on our list of the best semiconductor stocks to buy now. It is an American multinational company that deals in specialized processing units and integrated circuits for visual computing platforms.
In Q1 FY22, NVIDIA Corporation (NASDAQ: NVDA) generated $5.6 billion in revenue, showing 84% year-over-year growth. The EPS for the quarter stood at $3.66, beating the market estimate of $3.28. The NVDA stock has remained consistent for quite some time, soaring by 114% in the past year and 50.4% year to date. Citigroup has ranked the stock as a ‘Buy’ with a price target of $720.
NVIDIA Corporation (NASDAQ: NVDA) is a global leader in AI computing and its continuous efforts towards expanding the AI business have been acknowledged by investors and analysts. Due to this AI-based performance, Wells Fargo raised the price target on the stock to $875, rating it as ‘Overweight’. At the end of Q1 2021, 80 hedge funds tracked by Insider Monkey have positions in NVIDIA Corporation (NASDAQ: NVDA), worth $6.2 billion.
Like Skyworks Solutions, Inc. (NASDAQ: SWKS), ASML Holding N.V. (NASDAQ: ASML), and Broadcom Inc. (NASDAQ: AVGO), NVIDIA Corporation (NASDAQ: NVDA) is one of the best semiconductor stocks to buy now.
Vulcan Value Partners recently released its Q1 2021 investor letter and mentioned NVIDIA Corporation (NASDAQ: NVDA) in it. Here is what the firm has to say:
“NVIDIA Corp. is the dominant supplier of Graphics Processing Units (GPUs) worldwide. NVIDIA’s GPUs are at the intersection of a number of important computing trends including the movement to the Cloud, artificial intelligence, autonomous vehicles, edge computing, gaming, and more. We previously owned NVIDIA and sold it in the third quarter of 2020 as the price to value gap closed and our margin of safety was reduced. As with all our MVP companies, we continued to follow NVIDIA closely. Since that time, NVIDIA reported excellent results and its value has compounded rapidly. At the beginning of the year, the technology selloff negatively affected the stock price while our estimate of NVIDIA’s value per share increased. This happy combination of events created a margin of safety and an opportunity to once again add NVIDIA to the portfolio.”
2. Intel Corporation (NASDAQ: INTC)
Number of Hedge Fund Holders: 83
Intel Corporation (NASDAQ: INTC) is one of the biggest Silicon Valley companies in the world and deals in the production of semiconductor chips and microprocessors. These microprocessors are used in PCs made by some famous companies like Dell, Lenovo, HP, etc.
In Q1 2021, Intel Corporation (NASDAQ: INTC) reported a net income of $5.7 billion and EPS of $1.39, beating the market estimate of $1.15. The revenue for the quarter stood at $19.7 billion. The INTS stock has soared by 13.3% in the past six months. Earlier in May, Joseph Moore, an analyst at Morgan Stanley, raised the price target on INTS stock to $72, rating it as ‘Overweight’.
At the end of Q1 2021, we see that hedge funds are turning bullish on Intel Corporation (NASDAQ: INTC), as 83 funds have stakes in the company, up from 72 in the previous quarter.
Alger, an investment management firm, recently released its Q1 2021 investor letter and mentioned Intel Corporation (NASDAQ: INTC) and other stocks in it. Here is what the firm has to say:
“Short exposure to Intel also detracted from performance. Intel designs and manufactures semiconductors for the computing and communications industries. Intel’s proprietary intellectual strength and manufacturing prowess versus the competition is deteriorating, which is causing the company to lose market share and profit opportunities. The short position detracted from portfolio returns as the share price reacted positively to the announcement of Pat Gelsinger being hired as chief executive officer, a stronger-than-anticipated quarterly earnings report driven by unusually robust PC sales that we believe are unsustainable and the unveiling of “Intel Unleashed,” a new long-term program to help improve manufacturing and spur innovation. This program involves opening two fabrication plants in Arizona, which confirms Intel’s commitment to continue as an integrated design manufacturer. Importantly, Intel continues to experience issues with its next generation server chips which are disadvantaging Intel versus the competition.”
1. Micron Technology, Inc. (NASDAQ: MU)
Number of Hedge Fund Holders: 100
Micron Technology, Inc. (NASDAQ: MU) tops our list of the best semiconductor stocks to buy now. It is an American technology company that deals in memory and storage products produced for a wide range of applications. The company has operations in over 17 countries with 13 manufacturing sites.
In Q3 FY 21, Micron Technology, Inc. (NASDAQ: MU) reported a net income of $2.17 billion and revenue of $7.4 billion, up from $5.4 billion during the same period last year. The EPS beat the market estimate by $0.16 and stood at $1.88. The MU stock has soared by 57.7% in the past year. In June, BMO upgraded the MU stock to ‘Outperform’ and raised the price target on the stock to $110. The stock has delivered a 61.1% return in the past year.
At the end of Q1 2021, 100 hedge funds have positions in Micron Technology, Inc. (NASDAQ: MU), worth $7.6 billion. Arrowstreet Capital is the biggest shareholder in the company, with 14.7 million shares, worth $1.2 billion.
Bonsai Partners recently released its first-quarter 2021 investor letter and mentioned Micron Technology, Inc. (NASDAQ: MU) in it. Here is what the firm has to say:
“Micron is a manufacturer of memory semiconductor chips. Micron appreciated 17.3% during the quarter.
With the semiconductor cycle in full swing, sentiment continued to improve for major DRAM and NAND suppliers. Spot pricing for DRAM continues its upward march due to supply shocks across the industry and sustained demand levels that continue to outstrip supply.
As a result, Micron showed improving results for the fiscal first quarter, raised guidance intra-quarter for the fiscal second quarter, and offered strong guidance for the fiscal third quarter in both growth and margins.
While the cyclical nature of DRAM hasn’t changed, the cycles themselves continue to become more benign, leading to long-term economic improvement across these businesses. Micron is now continuously profitable, with industry players in a dramatically stronger position than even just five years ago.
The biggest negative surprise in the quarter came from Micron’s exit from its 3D XPoint hybrid memory business. The company also announced its decision to sell its accompanying Utah fab. Fortunately, this development does not alter the investment thesis much since 3D XPoint was an option ticket for future growth. While it’s unfortunate this product didn’t pan out, now is an excellent time to sell a fab, so perhaps it is a blessing in disguise?”
You can also take a peek at 15 Best Undervalued Stocks to Buy Now and 10 Best Mid-Cap Stocks To Buy Now.
