In this article, we discuss 5 semiconductor stocks to buy now. If you want to see more stocks in this list, click “This is When You Get Bullish”: 10 Semiconductor Stocks to Buy Now.
5. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 73
QUALCOMM Incorporated (NASDAQ:QCOM) is an American multinational company that designs and specializes in semiconductors, software, and wireless technology. On July 8, TF International Securities analyst Ming-Chi Kuo reported that QUALCOMM Incorporated (NASDAQ:QCOM) will potentially be the sole supplier to provide the processor for Samsung’s next flagship smartphone, the Galaxy S23. He also mentioned on June 28 that the company’s chips will be used in Apple Inc. (NASDAQ:AAPL)’s next-gen iPhones after Apple had issues with its own chips. These are positive catalysts for QUALCOMM Incorporated (NASDAQ:QCOM).
BofA added QUALCOMM Incorporated (NASDAQ:QCOM) to its “US 1 List” on June 28, which represents a collection of the firm’s top investment ideas from the list of Buy-rated, U.S. listed stocks assessed by its equity analysts.
Among the hedge funds tracked by Insider Monkey, 73 funds were bullish on QUALCOMM Incorporated (NASDAQ:QCOM) at the end of Q1 2022, compared to 75 funds in the previous quarter.
Here is what ClearBridge Investments Large Cap Value Strategy has to say about QUALCOMM Incorporated (NASDAQ:QCOM) in its Q4 2021 investor letter:
“Market strength continued in the fourth quarter, with only the communication services sector down in the Russell 1000 Value Index. Portfolio returns benefited from the strong performance of semiconductor maker Qualcomm, which has executed exceptionally well in pursuing the transition to 5G, growing both content and share due to its leadership position in cellular technology. The chipmaker recently outlined a number of peripheral growth opportunities outside of mobile markets, including automotive (where it hopes to leverage its strong presence in the automotive infotainment space into advanced driver assistance systems), Internet of Things (including opportunities in the PC market, VR/AR market, and factory automation) and radio frequency (where mmWave adoption globally, including China, would drive substantial upside).”
4. Applied Materials, Inc. (NASDAQ:AMAT)
Number of Hedge Fund Holders: 74
Applied Materials, Inc. (NASDAQ:AMAT) provides manufacturing equipment and software to the semiconductor industry. The company operates through Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets segments. BofA analyst Vivek Arya on June 29 maintained a Buy rating on Applied Materials, Inc. (NASDAQ:AMAT) but lowered the price target on the stock to $118 from $135.
On June 9, Applied Materials, Inc. (NASDAQ:AMAT) declared a $0.26 per share quarterly dividend, in line with previous. The dividend is distributable on September 15, to shareholders of the company as of the close of business on August 25. Applied Materials, Inc. (NASDAQ:AMAT) announced on June 16 that it has acquired Picosun Oy, a privately held Finnish semiconductor equipment company. The company stated that Picosun’s ALD technology enhances its product portfolio and customer engagements. Picosun also lends extensive R&D capabilities and strong links with top research institutions and universities worldwide to Applied Materials, Inc. (NASDAQ:AMAT).
According to Insider Monkey’s Q1 data, 74 hedge funds reported bullish positions in Applied Materials, Inc. (NASDAQ:AMAT), with collective stakes worth $4.39 billion. David Blood and Al Gore’s Generation Investment Management featured as the leading stakeholder of the company, with 4.25 million shares valued at $561 million.
Here is what Davis Opportunity Fund has to say about Applied Materials, Inc. (NASDAQ:AMAT) in its Q4 2021 investor letter:
“Within technology and communication services, we own a number of online businesses and semiconductor related companies, including Alphabet, Amazon, Intel, Applied Materials and Texas Instruments. Within the realm of high technology, we believe that leadership positions reflect enduring and widening competitive advantages over smaller competitors, with few exceptions. This is because online businesses, as well as semiconductor companies, benefit from economies of scale. An online search and advertising engine will, in general, be more profitable per unit of cost as it grows larger in terms of users and advertising dollars. It is a hub-and-spoke model, in other words, where it is generally not necessary to grow expenses at the same rate that revenues grow beyond a certain threshold. Therefore, returns on capital tend to be higher, the larger and more dominant the online search company is.”
3. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 81
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) designs and sells integrated circuits and related semiconductor devices in Taiwan, China, Europe, the Middle East, Africa, Japan, and the United States. On July 8, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) posted net revenue of approximately NT$175.87 billion for June 2022, reflecting an 18.5% year over year growth. Consolidated revenue from January to June 2022 totaled NT$1,025.22 billion, representing a 39.6% increase compared to the same period last year.
Loop Capital analyst Charles Park initiated coverage of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) on June 21 with a Buy rating and a NT$600 price target. The analyst is optimistic about the company’s role as the market leader in the long-term structural growth due to “ubiquitous” computing and a range of emerging technology such as 5G, IoT, and AI/ML/Cloud.
Among the hedge funds tracked by Insider Monkey, 81 funds were bullish on Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) at the end of Q1 2022, up from 72 funds in the earlier quarter. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is one of the leading shareholders of the company, with more than 9 million shares worth $945 million.
Here is what Baron New Asia Fund has to say about Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q1 2022 investor letter:
“Semiconductor giant Taiwan Semiconductor Manufacturing Company Ltd. detracted in the first quarter due to rising geopolitical tensions, macroeconomic uncertainties, and concerns over 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 above its 15% to 20% revenue growth target over the next several years.”
2. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 83
Advanced Micro Devices, Inc. (NASDAQ:AMD) is a California-based semiconductor company that operates in two segments – Computing and Graphics and Enterprise, Embedded and Semi-Custom. Northland analyst Gus Richard upgraded Advanced Micro Devices, Inc. (NASDAQ:AMD) on June 30 to Outperform from Market Perform with a price target of $95. BofA analyst Vivek Arya on June 29 also maintained a Buy rating on the stock and lowered the firm’s price target to $110 from $160.
In Q1 2022, 83 hedge funds were bullish on Advanced Micro Devices, Inc. (NASDAQ:AMD), up from 69 funds in the preceding quarter. Jim Simons’ Renaissance Technologies is a significant stakeholder of the company, with more than 7 million shares worth over $777 million.
Here is what Carillon Tower Advisers has to say about Advanced Micro Devices, Inc. (NASDAQ:AMD) in its Q4 2021 investor letter:
“Advanced Micro Devices (AMD) supplies semiconductor chips for central processing units (CPUs) and graphic processing units (GPUs). The firm has been gaining share against its primary competitor in the datacenter server CPU space, as this rival has been unable to match the design and manufacturing capabilities of AMD and its partners. Investors are also looking forward to the closing of the previously announced merger with a semiconductor manufacturer that is another one of the portfolio’s holdings. The merger will increase AMD’s capabilities in the Field Programmable Gate Array (FPGA) chip space, and the combined company should possess the potential to win additional market share in the datacenter chip market.”
1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 102
NVIDIA Corporation (NASDAQ:NVDA) was incorporated in 1993 and is headquartered in Santa Clara, California. NVIDIA Corporation (NASDAQ:NVDA) is one of the leading players in the semiconductor industry. On July 7, Samsung reported its Q2 results, posting the highest profit since 2018. NVIDIA Corporation (NASDAQ:NVDA) subsequently gained 4.8%, closing at $158.58 as the leader in the chip space.
Tigress Financial analyst Ivan Feinseth on July 8 maintained a Buy rating on NVIDIA Corporation (NASDAQ:NVDA) but lowered the price target on the shares to $310 from $410. The analyst observed that NVIDIA Corporation (NASDAQ:NVDA)’s leading position in data centers, autonomous technology, and artificial intelligence will continue to result in increasing growth. The reduced price target was due to a rerating of company valuation, noted the analyst, who still sees more than 90% upside from present levels.
According to Insider Monkey’s Q1 data, 102 hedge funds were long NVIDIA Corporation (NASDAQ:NVDA), compared to 110 funds in the prior quarter. Phill Gross and Robert Atchinson’s Adage Capital Management is a prominent shareholder of the company, with 2.5 million shares worth $694.4 million.
Here is what RiverPark Long/Short Opportunity Fund has to say about NVIDIA Corporation (NASDAQ:NVDA) in its Q1 2022 investor letter:
“Nvidia is the leading designer of graphics processing chips (commonly known as GPU’s- graphics processing units), required for powerful computer processing. Over the past 20 years, the company has evolved through innovation and adaptation from a predominantly gaming- focused chip vendor to one of the largest semiconductor/software vendors in the world, dominating the core secular growth markets of gaming, data centers and professional visualization. Over the past decade, the company has grown revenue at a compound annual rate of over 20% while expanding operating margins and, through its asset light business model, producing ever increasing amounts of free cash flow. For 2021 the company generated 61% revenue growth to $27 billion, expanded its EBITDA margins to over 44% and generated over $8 billion of free cash flow. Over the past five years, the company has generated a cumulative $23 billion of FCF after cumulative capital expenditures of less than $4 billion.
We expect future growth to remain robust as NVDA chips and software are critical to many of the core technologies being adopted globally, including cloud computing, virtual reality and advanced artificial intelligence. As with NFLX, we took advantage of the over 40% recent drop in the company’s shares over the last several months to initiate a small position.”
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