In this piece, we will take a look at the five semiconductor stocks to buy today according to Peter Rathjens, Bruce Clark, and John Campbell’s Arroswtreet Capital. If you want details about the hedge fund and more stocks, then head on over to 10 Semiconductor Stocks To Buy Today According To Peter Rathjens, Bruce Clark and John Campbell’s Arrowstreet Capital.
5. International Business Machines Corporation (NYSE:IBM)
Arrowstreet Capital’s Stake Value: $440 million
Percentage of Arrowstreet Capital’s 13F Portfolio: 0.53%
Number of Hedge Fund Holders: 42
International Business Machines Corporation (NYSE:IBM) is an American company that was previously involved in the direct sales of semiconductors. However, while it has exited this business, the company is still actively involved in semiconductor research, which has enabled it to consistently deliver breakthrough technologies. The company was the first to develop a 7-nanometer chip in 2015, the first with a 5-nanometer chip in 2017, and the first with a 2-nanometer chip in 2021.
Arrowstreet Capital owned 3.2 million International Business Machines Corporation (NYSE:IBM) shares as the fourth quarter of last year came to an end. These translated into a cool $440 million stake which represented 0.53% of its investment portfolio. At the same time, 42 out of the 924 hedge funds part of Insider Monkey’s Q4 2021 poll had a stake in the company.
International Business Machines Corporation (NYSE:IBM) posted $16.7 billion in revenue and $3.35 in non-GAAP EPS for its fiscal Q4, beating analyst estimates for both. Tigress Financial reiterated a $133 share price target for the company in January 2022, outlining that the company’s cloud division is performing strongly.
Paul Marshall and Ian Wace’s Marshall Wace LLP is International Business Machines Corporation (NYSE:IBM)’s largest investor after Arrowstreet. It owns 1.3 million shares worth $181 million.
St. James Investment Company mentioned International Business Machines Corporation (NYSE:IBM) in its fourth quarter 2021 investor letter, stating that:
“IBM was not the first company to build computers. The distinction belongs to Sperry-Rand’s subsidiary UNIVAC, which introduced the first commercially successful computers in the early 1950s. In this era, IBM did possess the largest research and development department of the business machines industry and quickly caught up, introducing cost-competitive computers a few years after UNIVAC. By the late 1950s, IBM held the dominant market share in computers. IBM also touted a vastly superior sales organization, which used a sales tactic called “paper machines” (the equivalent of today’s “vaporware”). If a competitor’s product was selling well in a market segment that IBM had yet to penetrate, the company would announce a competing product and start taking orders for the “paper machine” long before it was available.
One cannot overstate how powerful IBM was in the computer industry in the 1950s and 1960s. Every competitor rightly worried that if their product worked too well for too long, it was only a matter of
time before an army of IBM salesforce representatives mobilized. In their easily recognizable uniforms of starched white shirts, red ties and blue suits, IBM marketers marched on their customers and offered a more expensive, but much more defensible, choice. “Nobody gets fired for buying IBM” was a common phrase. Even competitors acknowledged that the company excelled at sales. As a UNIVAC executive once complained, ‘It doesn’t do much good to build a better mousetrap if the other guy selling mousetraps has five times as many salesmen.’”
4. Cisco Systems, Inc. (NASDAQ:CSCO)
Arrowstreet Capital’s Stake Value: $487 million
Percentage of Arrowstreet Capital’s 13F Portfolio: 0.59%
Number of Hedge Fund Holders: 58
Cisco Systems, Inc. (NASDAQ:CSCO) is an American company best known for its connectivity equipment such as routers and more that are involved in transporting and transferring data in data centers and networks. The company has also expanded into the semiconductor space after it announced in 2019 that it will sell switching chips to data center companies. Previously, Cisco Systems, Inc. (NASDAQ:CSCO) had used these chips only in its own products.
Cisco Systems, Inc. (NASDAQ:CSCO) brought in $12.7 billion in revenue and $0.84 in GAAP EPS during its second fiscal quarter, posting modest revenue growth and beating analyst estimates for both metrics. Cowen raised its share price target to $66 from $61 in February 2022, highlighting that the earnings reaffirmed modeled estimates and increasing component costs will be balanced with a price increase.
During 4Q 2021, Arrowstreet Capital had a $487 million stake in Cisco Systems, Inc. (NASDAQ:CSCO), which was in the form of 7.6 million shares. 58 out of 924 hedge funds profiled by Insider Monkey during the same time period also held the company’s shares.
Cisco Systems, Inc. (NASDAQ:CSCO)’s largest investor is Ken Fisher’s Fisher Asset Management which owns 12.7 million shares worth $809 million.
ClearBridge Investments mentioned Cisco Systems, Inc. (NASDAQ:CSCO) in its third quarter 2021 investor letter. Here is what the firm said:
“We reinvested a portion of the proceeds into existing holding Cisco Systems, which also has highly valuable technology and an improving secular growth story with its leading position in core networking hardware, as well as in its growing software and services business. Cisco has refocused on winning share in the large and growing hyperscale market and has been investing aggressively in R&D to support growth. We believe Cisco has found new legs after previously ceding some growth opportunities in cloud while maintaining its strong presence in the carrier and enterprise markets. Cisco boasts a strong balance sheet and accelerating multiyear growth while trading at a modest multiple of earnings.”
3. NVIDIA Corporation (NASDAQ:NVDA)
Arrowstreet Capital’s Stake Value: $910 million
Percentage of Arrowstreet Capital’s 13F Portfolio: 1.11%
Number of Hedge Fund Holders: 111
NVIDIA Corporation (NASDAQ:NVDA) is an American company that is at the heart of the ongoing semiconductor revolution. The company is known for designing graphics processing units (GPUs) which were initially used only by gamers to run video games. Since then, NVIDIA Corporation (NASDAQ:NVDA) has now expanded its presence to cover the rapidly growing data center market, allowing its products to complement the central processing units (CPUs) that have traditionally powered these platforms.
Arrowstreet Capital held a $910 million stake in NVIDIA Corporation (NASDAQ:NVDA) during the fourth quarter of 2021. It owned 3 million shares and the stake represented 1.11% of the firm’s investment portfolio. An Insider Monkey survey of 924 during the same period revealed that 111 had also owned the company’s shares.
By the end of its fiscal Q4, NVIDIA Corporation (NASDAQ:NVDA) had earned $7.6 billion in revenue and $1.32 in non-GAAP EPS, beating analyst estimates for both. NVIDIA Corporation (NASDAQ:NVDA) expanded its presence in the high performance computing (HPC) sector in March 2022, after it announced that it had brought a high performance software defined storage company under its wing.
Ken Fisher’s Fisher Asset Management is NVIDIA Corporation (NASDAQ:NVDA)’s largest investor through a $1.5 billion stake via 5.1 million shares.
In a third quarter 20221 investor letter, Harding Loevner had the following to say about NVIDIA Corporation (NASDAQ:NVDA):
“The proliferation of devices using chips, whether EVs, “things” in lol, or embedded systems more generally, results in the generation of oceans of data potentially needing to be stored, processed, and analyzed. NVIDIA, the leading chip designer wellknown for its graphic processing units and its complementary CUDA software ecosystem, is at the forefront of the effort to provide the analytical platform needed to unlock the full potential of such specialist processors.”
2. ASML Holding N.V. (NASDAQ:ASML)
Arrowstreet Capital’s Stake Value: $1.1 billion
Percentage of Arrowstreet Capital’s 13F Portfolio: 1.34%
Number of Hedge Fund Holders: 41
ASML Holding N.V. (NASDAQ:ASML) is a chip manufacturing equipment provider. It is the only company in the world that is capable of making these machines; a fact that has let it gain a crucial place in the semiconductor industry. Its importance is compounded by the fact that due to their complexity, these machines take a long time to be built, which results in a scarce number available for sale each year.
ASML Holding N.V. (NASDAQ:ASML)’s fiscal Q4 results revealed that it had brought in €4.98 billion in revenue and €4.27 in GAAP EPS. The company is currently developing advanced chipmaking machines that are dubbed as High-NA EUV. These use extreme ultraviolet light with a larger lens to print crisper designs on a silicon wafer.
Arrowstreet Capital owned 1.3 million ASML Holding N.V. (NASDAQ:ASML) shares during the fourth quarter of 2021, which enabled it to hold a $1.1 billion stake which represented 1.34% of its portfolio. At the same time, 41 out of the 924 hedge funds polled by Insider Monkey had also owned the company’s shares.
ASML Holding N.V. (NASDAQ:ASML)’s largest investor is Ken Fisher’s Fisher Asset Management. It owns a $3.4 billion stake that comes through 4.2 million shares.
Polen Capital mentioned ASML Holding N.V. (NASDAQ:ASML) in its Q2 2021 investor letter. Here is what the firm said:
“Dutch technology company ASML is the world’s only supplier of photolithography systems to leading-edge semiconductor manufacturers. It is a gross simplification and a valid point to note that ASML’s technology enables the computing technology we use today. For years, ASML engineers bent the laws of physics and enabled Moore’s Law—which states that computer chips will become faster and cost less—to progress.
Incremental innovation gains mushroomed with the rollout of Extreme Ultraviolet (EUV) technology. We were impressed by management’s recent acknowledgment that demand for ASML’s lithography systems is exceeding their prior expectations. Recent announcements by management and major customers for ASML give us even more confidence in the sustainability of growth. We believe ASML could grow its earnings at a high-teens rate over the coming five years.”
1. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Arrowstreet Capital’s Stake Value: $1.2 billion
Percentage of Arrowstreet Capital’s 13F Portfolio: 1.47%
Number of Hedge Fund Holders: 75
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is a Taiwanese company that has risen to the top of the semiconductor industry in recent years. The company is responsible for providing chips to corporate customers based on their designs, and it does not sell any products to the general consumer.
For its fiscal Q4, the Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) had brought in $15.7 billion in revenue and $1.15 in GAAP EPS, beating analyst estimates for both. Investment bank Morgan Stanley upgraded its stock rating to Overweight from Equal Weight in February 2022, as it stated that the negative effects of the current chip correction will be overweighed by positive developments in the future.
Arrowstreet Capital owned more than 10 million Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) shares during Q4 2021, which let it own a $1.2 billion stake that made up 1.47% of its investment portfolio. An Insider Monkey survey of 924 hedge funds that covered the same time period revealed that 75 had also owned the company’s shares.
The Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)’s largest investor is Ken Fisher’s Fisher Asset Management. It has a $3.1 billion stake through 25.9 million shares.
L1 Capital mentioned the Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its third quarter 2021 investor letter. Here is what the fund said:
“Even though they are not majority State owned and we would expect many of China’s technology champions to continue to grow strongly, outcomes for shareholders may be unsatisfactory… The Fund has retained its investment in Taiwan Semiconductor Manufacturing Company (TSMC) which is well placed to maintain its global leadership in semiconductor manufacturing. Due to geopolitical risks, we limit the position size of TSMC in the Fund.”
Disclosure: None. You can also take a peek at the 10 Cryptocurrencies to Watch Amid Russia’s Attack on Ukraine and 15 Best Warren Buffett Stocks to Buy Now.
