In this article, we discuss the 5 semiconductor stocks to buy on the dip. If you want to read about some more semiconductor stocks to buy on the dip, go directly to 10 Semiconductor Stocks to Buy on the Dip.
5. Applied Materials, Inc. (NASDAQ:AMAT)
Number of Hedge Fund Holders: 74
Percentage Decline in Share Price Over Past Six Months: 25.22%
Applied Materials, Inc. (NASDAQ:AMAT) provides equipment, services, and software for the semiconductor industry. The company is one of the safest bets in the chip space as it has an impressive dividend history that stretches back seven years. For the past four years, the payouts have registered consistent growth in a sector where the median in this regard is just one year. On June 9, the company declared a quarterly dividend of $0.26 per share, in line with previous. The forward yield was 0.97%.
On July 15, Goldman Sachs analyst Toshiya Hari maintained a Buy rating on Applied Materials, Inc. (NASDAQ:AMAT) stock and lowered the price target to $95 from $133, noting that there was continued deterioration in the macro operating environment for the chip industry.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm Generation Investment Management is a leading shareholder in Applied Materials, Inc. (NASDAQ:AMAT), with 4.2 million shares worth more than $560 million.
4. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 76
Percentage Decline in Share Price Over Past Six Months: 29.11%
Intel Corporation (NASDAQ:INTC) markets key technologies for smart devices. Reports indicate that the company is close to an agreement with authorities in Italy to build a new chip making plant in the country. Intel is likely to invest $5 billion into the plant. The move is part of a broader plan by the company to invest around $88 billion in Europe over the next ten years to compete with European chip makers and Chinese chip makers. The agreement with Italy is expected to be announced by the end of August.
On August 1, Northland analyst Gus Richard maintained an Outperform rating on Intel Corporation (NASDAQ:INTC) stock with a price target of $55, noting that the firm controlled its own destiny and had a manufacturing capability that had strategic value for the US.
At the end of the first quarter of 2022, 76 hedge funds in the database of Insider Monkey held stakes worth $3.1 billion in Intel Corporation (NASDAQ:INTC), compared to 72 in the previous quarter worth $5.5 billion.
Baron Funds, an asset management firm, mentioned Intel Corporation (NASDAQ:INTC) in its first-quarter 2022 investor letter. Here is what they said:
“Intel Corporation (NASDAQ:INTC) capital spending process is guided by a process they appropriately named “copy exactly.” This means that they attempt to “copy exactly” what they have already built and attempt to improve tried and true processes iteratively.”
3. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 81
Percentage Decline in Share Price Over Past Six Months: 29.94%
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) makes and sells integrated circuits and semiconductors. The firm has deals in place to supply chips to big firms like Apple and Volkswagen but has come under pressure in recent months as the US increases restrictions on business with Chinese chip firms. Reports indicate that Apple has already asked chip makers from China to relabel shipments to avoid this increased scrutiny. US lawmaker Nancy Pelosi recently met TSM founder Morris Chang during a visit to Taiwan.
On July 12, Citi analyst Roland Shu maintained a Buy rating on Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) stock with a price target of NT$570, appreciating the second quarter earnings beat of the firm.
At the end of the first quarter of 2022, 81 hedge funds in the database of Insider Monkey held stakes worth $10.1 billion in Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), up from 72 in the preceding quarter worth $10.9 billion.
In its Q1 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) was one of them. Here is what the fund said:
“Semiconductor giant Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) 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. Micron Technology (NASDAQ:MU)
Number of Hedge Fund Holders: 78
Percentage Decline in Share Price Over Past Six Months: 30.27%
Micron Technology (NASDAQ:MU) makes and sells memory and storage products. On June 30, the company posted earnings for the third fiscal quarter, reporting earnings per share of $2.59, beating market estimates by $0.15. The revenue over the period was $8.6 billion, up more than 16% compared to the revenue over the same period last year. The firm said it expected revenue for the fourth fiscal quarter to be around $7.6 billion, compared to consensus estimates of more than $9 billion, amid weakening industry demand.
On July 1, Evercore ISI analyst C.J. Muse maintained an Outperform rating on Micron Technology (NASDAQ:MU) stock with a price target of $90, noting that there was excess conservatism in the update outlook for the firm given the macro environment.
At the end of the first quarter of 2022, 78 hedge funds in the database of Insider Monkey held stakes worth $3.4 billion in Micron Technology (NASDAQ:MU), compared to 83 in the preceding quarter worth $5.5 billion.
1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 102
Percentage Decline in Share Price Over Past Six Months: 33.37%
NVIDIA Corporation (NASDAQ:NVDA) operates as a visual computing firm. The company is expected to be one of the biggest beneficiaries of the recently passed CHIPS Act. Under the Act, the US government will pour in hundreds of billions into the chip industry to increase manufacturing capabilities and shore up the research and development as part of a larger effort to compete with Chinese chip makers in Europe and across the world. Tech giant Samsung, a NVIDIA customer, is also going to invest $200 billion in the US chip industry.
On August 8, Oppenheimer analyst Rick Schafer maintained an Outperform rating on NVIDIA Corporation (NASDAQ:NVDA) stock and lowered the price target to $250 from $300, noting that the firm was well positioned to outperform peers in the long term despite short term headwinds.
At the end of the first quarter of 2022, 102 hedge funds in the database of Insider Monkey held stakes worth $6.3 billion in NVIDIA Corporation (NASDAQ:NVDA), compared to 110 the preceding quarter worth $10.4 billion.
In its Q1 2022 investor letter, RiverPark Funds, an asset management firm, highlighted a few stocks and NVIDIA Corporation (NASDAQ:NVDA) was one of them. Here is what the fund said:
“NVIDIA Corporation (NASDAQ:NVDA) 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 NVIDIA Corporation (NASDAQ: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.”
You can also take a peek at 10 Russell 2000 Basic Materials Dividend Stocks to Buy and 10 Utilities Stocks with Over 3% Dividend Yield.
