In this piece, we will take a look at the 5 semiconductor stocks to watch amid Russia-Ukraine war. For a detailed look at the impact of the current situation on the semiconductor sector, head on over to 10 Semiconductor Stocks To Watch Amid Russia-Ukraine War.
5. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 74
Intel Corporation (NASDAQ:INTC) is the world’s largest chipmaker and is known as the pioneer of the modern-day semiconductor. The company is known for primarily selling central processing units (CPUs) to both public and private sector customers alongside its largest market, the general public. It is also developing graphics processing units (GPU) to better compete with other firms in the consumer electronics segment.
Intel Corporation (NASDAQ:INTC) raked in $19.5 billion in revenue and $1.09 in non-GAAP EPS, beating analyst estimates on both counts. The company is currently in the midst of a massive capital spending run that is aimed at boosting its chip manufacturing capabilities. Raymond James upgraded Intel Corporation (NASDAQ:INTC)’s shares to Market Perform in February 2022, outlining that in order to profit from Intel’s expenditures, investors will have to face some pain but that the shares should not underperform in the near future. Out of the 924 hedge funds polled by Insider Monkey in Q4 2021, 74 had owned the company’s shares.
Intel Corporation (NASDAQ:INTC)’s largest investor according to Insider Monkey’s research is Seth Klarman’s Baupost Group which owns 18 million shares worth $928 million.
“2021 was a highly productive year for Intel‘s new CEO, Pat Gelsinger. Despite the stock’s tepid results, we see a compelling, underappreciated fundamental story. Intel’s “brain drain” – a key part of our thesis when we first sought to help the company confront its long-time underperformance – appears to be reversing. Since joining Intel, Mr. Gelsinger has not only brought back prominent Intel former employees but has also attracted talents from competitors such as AMD, Nvidia, Apple, and, most recently, Micron’s stellar Chief Financial Officer, David Zinsner.
We are encouraged by Intel’s aggressive investment plan, including a recently announced fabrication plant in Ohio and acquisition of Tower Semiconductors. We knew from the start that Intel’s turnaround would be complex and lengthy, and we have been pleased to see Mr. Gelsinger sacrifice near-term earnings for long-term growth.
Finally, after a series of blunders across its PC and Server product lines, Intel is finally receiving good reviews for one of its upcoming processors: Alder Lake. Tom’s Hardware, a preeminent hardware publication, called Alder Lake “a cataclysmic shift in Intel’s battle against AMD’s potent Ryzen 5000 chips.” While this is just one product across a broad lineup, and given it will take time to achieve leadership across them all, we are encouraged by these tangible signs of progress under Mr. Gelsinger’s leadership. With talent returning, an improving product suite, and a willingness to invest for growth, we believe Intel’s prospects have turned the corner. We expect that the company’s upcoming analyst day will be an ideal time for Mr. Gelsinger to articulate the progress he has made and begin to reset expectations for the company.”
4. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 75
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the world’s largest contract chip manufacturer. It is a company that manufactures semiconductors for other firms based on their designs. The company has grown in prominence lately as it has been able to challenge U.S. chip giant Intel Corporation (NASDAQ:INTC) in manufacturing technologies.
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) earned $15.74 billion in revenue and $1.15 in GAAP EPS in its fourth fiscal quarter, beating analyst estimates for EPS. Morgan Stanley upgraded the company’s shares to Overweight in February this year, outlining that the long term future is positive for the company despite worries of a looming correction in the chip industry. An Insider Monkey survey of 924 funds in the fourth quarter of last year revealed that 75 had owned the company’s shares.
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)’s largest investor is Ken Fisher’s Fisher Asset Management according to Insider Monkey’s research. The firm owns 25.9 million shares that are worth $3 billion.
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) was mentioned by L1 Capital in its third quarter 2021 investor letter. The firm stated that:
“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.”
3. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 76
QUALCOMM Incorporated (NASDAQ:QCOM) is one of the largest semiconductor designers in the world. The company’s chips power most of the world’s smartphones, and it also designs other semiconductors such as those for connected vehicles.
QUALCOMM Incorporated (NASDAQ:QCOM) earned $10.7 billion in revenue and $3.23 in non-GAAP EPS during its first fiscal quarter, surpassing Wall Street expectations on both metrics. Its price target was increased by $50 to $250 by Baird in February 2022, with the firm highlighting that inventory corrections should not impact the company and that it is successfully targeting the high-end segment. 76 of the 924 firms part of Insider Monkey’s Q4 2022 survey had holdings in the company.
QUALCOMM Incorporated (NASDAQ:QCOM)’s largest investor is Panayotis Takis Sparaggis’ Alkeon Capital Management who owns 5.3 million shares worth $970 million.
2. Micron Technology, Inc. (NASDAQ:MU)
Number of Hedge Fund Holders: 83
Micron Technology, Inc. (NASDAQ:MU) is another American firm that targets a segment of the global semiconductor market that is generally referred to as the memory sector. This sector deals with products that aid computational chips in their processing. The company’s products cover several markets such as those for personal computing, data center, networking, and smartphones.
As its first fiscal quarter came to an end, Micron Technology, Inc. (NASDAQ:MU) had earned $7.69 billion in revenue and $2.16 in non-GAAP EPS, beating analyst estimates for both. Wedbush set a $120 price target, up from the previous $100, for the company in February 2022, outlining that operational advantages provide strengths to the company over its peers. 83 of the 924 hedge funds surveyed by Insider Monkey in Q4 2021 had owned a stake in the company.
Paul Marshall And Ian Wace’s Marshall Wace LLP is Micron Technology, Inc. (NASDAQ:MU)’s largest investor. It has a stake of $507 million through owning 5.4 million shares.
Hazelton Capital Partners mentioned Micron Technology, Inc. (NASDAQ:MU) in its Q3 2021 investor letter, believing that:
“It’s hard to explain how shares of Micron Technology, manufacture of DRAM and NAND semiconductor chips, can fall during a global chip shortage. In most industries, focusing on demand can give you a clear insight into what lays ahead for a company. Today, the memory and storage chip industry is no different. However, in the past, companies focused on market share led to the reckless build out of chip fabrication plants (FABs), oversupply, falling average selling prices (ASPs) of memory and storage chips, lower margins, and declining cash flows. As the industry consolidated – there are now just 3 major producers of DRAM and 5 on the NAND side – rational behavior among the key players began to take hold as competitors began focusing more on R&D. Currently, chip pricing remains cyclical although less so than in the past and that cyclicality has a long-term upward bias. The ongoing transition to newer and more robust platforms (3D 176-layer NAND & 1-Alpha node DRAM) has provided the memory and storage chip industry with improved supply capacity under its current manufacturing footprint, ultimately pressuring ASPs. Over the past three years, as most of the large platform conversions have already taken place, being able to add more bits per wafer has reached a saturation point. With no major FAB build outs planned in the near-term by competitors Samsung or SK Hynix, constrained supply and flattening cost curves should lead to durable and upward sloping ASPs once the recent volatility from the chip shortage subsides.
Currently Micron Technology trades at just 8x 2022 estimate earnings. MU is expecting growth in both DRAM and NAND not just from the supply of more chips to data centers, artificial intelligence, the auto sector, and mobile devices, but also from greater demand for gigabyte capacity per unit within those segments. With a healthy balance sheet, improving return on invested capital, and expanding cash flows, not only should Micron benefit from improving future earnings but its multiple should also reflect the transition to a flattening cost curve.”
1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 111
NVIDIA Corporation (NASDAQ:NVDA) is the largest semiconductor designer in the world in terms of market capitalization. The company is primarily responsible for designing and selling graphics processing units (GPUs) to a wide variety of corporate and other customers. It also sells its products to the general public, and was in the spotlight lately due to a failed bid to acquire British design house Arm Ltd.
During its fiscal fourth quarter, NVIDIA Corporation (NASDAQ:NVDA) managed to earn $7.6 billion in revenue and $1.32 in non-GAAP EPS, beating analyst estimates for both. In its ongoing quarter, NVIDIA will pay a massive termination fee to Arm Ltd. due to its failed acquisition bid. 111 out of the 924 hedge funds polled by Insider Monkey during Q4 2021 had owned a stake in the company. Mizuho raised NVIDIA Corporation (NASDAQ:NVDA)’s price target to $345 from $335 in February 2022, outlining that the company had provided solid guidance.
Ken Fisher’s Fisher Asset Management is NVIDIA Corporation (NASDAQ:NVDA)’s largest investor through a $1.9 billion stake via owning 5.1 million shares.
Disclosure: None. You can also take a peek at 10 Most Profitable Industries in the US and Billionaire Masayoshi Son’s Top 10 Stock Picks for 2021.
