In this article, we will look at the 5 semiconductor stocks to watch as macroeconomic uncertainty grows. If you want to explore more semiconductor stocks that can either gain or lose in the coming months based on industry dynamics, you can read “Their Visibility is Zero”: 10 Semiconductor Stocks to Watch as Uncertainty Grows.
5. Applied Materials, Inc. (NASDAQ:AMAT)
Number of Hedge Fund Holders: 67
Applied Materials, Inc. (NASDAQ:AMAT) has a high-consumer exposure as its semiconductor chips are used in computers, smartphones, TVs, and other consumer electronics. The company is highly vulnerable to a potential economic slowdown. Regardless, the company reported a strong beat on August 18 when it announced earnings for the third quarter of fiscal 2022. The company reported a revenue of $6.52 billion and beat expectations by $252.41 million. The company reported earnings per share of $1.94 and outperformed consensus by $0.16.
On August 22, Citi analyst Atif Malik trimmed his price target on Applied Materials, Inc. (NASDAQ:AMAT) to $150 from $160 but reiterated a Buy rating on the shares. The analyst noted that demand for the company’s wafer fab equipment remains above supply.
At the end of Q2 2022, 67 hedge funds held stakes in Applied Materials, Inc. (NASDAQ:AMAT) worth $3.68 billion. Of those, Generation Investment Management was the leading shareholder with stakes worth $555 million.
4. Micron Technology, Inc. (NASDAQ:MU)
Number of Hedge Fund Holders: 69
Micron Technology, Inc. (NASDAQ:MU) is a leading semiconductor manufacturer that is most widely known for its memory and storage products. On September 1, Micron Technology, Inc. (NASDAQ:MU) announced that it will be investing roughly $15 billion by 2030 to construct a new leading-edge memory manufacturing plant in Idaho. This will ensure that the U.S. makes its own chips and reduce its dependence on exports to get chips for key end markets such as automotive and data centers.
Even though Micron Technology, Inc. (NASDAQ:MU) is committed to expanding its base in the U.S., the semiconductor giant is suffering from demand weakness. On August 9, Micron Technology, Inc. (NASDAQ:MU) cut its revenue guidance for the fiscal fourth quarter of 2022 to a range between $6.8 billion and $7.6 billion, after the chipmaker reported that demand for its DRAM and NAND has declined since its earnings call on June 30, 2022.
On August 9, Raymond James analyst Melissa Fairbanks downgraded Micron Technology, Inc. (NASDAQ:MU) to Outperform from Strong Buy and slashed her price target to $65 from $72. The analyst said that she sees near-term headwinds negatively impacting the stock, but she sees Micron Technology, Inc.’s (NASDAQ:MU) pricing power and technology advantages over peers to drive the company’s long-term growth.
At the end of Q2 2022, 69 hedge funds were long Micron Technology, Inc. (NASDAQ:MU) and held stakes worth $2.16 billion in the company. Of those, Matrix Capital Management was the top shareholder with stakes worth $221 million.
3. QUALCOMM, Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 71
Though QUALCOMM, Incorporated (NASDAQ:QCOM) derives a major chunk of its revenue from smartphones, the semiconductor giant also makes chips for end markets that have minimal consumer exposure, such as server, IoT, enterprise, cloud, and 5G among others. QUALCOMM Incorporated (NASDAQ:QCOM) may suffer from demand weakness in smartphones, but the company’s other markets, primarily 5G and server, can help it weather a potential slowdown.
This September, QUALCOMM, Incorporated (NASDAQ:QCOM) announced its partnership with Meta Platforms (NASDAQ:META) by which it will develop customized semiconductors for the Quest VR headsets. On August 18, QUALCOMM Incorporated (NASDAQ:QCOM) announced that it is seeking server clients for its new server chips. Amazon.com, Inc. (NASDAQ:AMZN) is among the company’s first server clients to install and test its server chips.
This July, Mizuho analyst Vijay Rakesh upped his price target on QUALCOMM Incorporated (NASDAQ:QCOM) to $175 from $168 and reiterated a Buy rating on the shares.
At the end of the second quarter of 2022, 71 hedge funds held stakes in QUALCOMM Incorporated (NASDAQ:QCOM) worth $2.80 billion. As of June 30, Alkeon Capital Management owns 4,23 million shares of QUALCOMM Incorporated (NASDAQ:QCOM) and is the largest shareholder in the company.
2. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 84
NVIDIA Corporation (NASDAQ:NVDA) is among the world’s leading graphics card manufacturers, and its biggest end markets include gaming, data centers, and artificial intelligence. On August 25, the company slashed its guidance and said that it expects third-quarter revenue for fiscal 2022 to amount to $5.9 billion, below analyst expectations of $6.92 billion. The company sees a declining demand for GPUs used in gaming and mining crypto. The company’s gaming revenue declined by 44% in the fiscal second quarter of 2023. NVIDIA Corporation (NASDAQ:NVDA) reported that its inventory during the quarter amounted to $3.89 billion, up from $2.11 billion in the second quarter of fiscal 2022. The company plans to reduce the prices of its GPUs to reduce its excess inventory as we move into the back half of 2022.
Wall Street is bearish on NVIDIA Corporation (NASDAQ:NVDA) as the company “did not have a better understanding of the channel inventory level”. On September 2, Daiwa analyst Louis Miscioscia downgraded NVIDIA Corporation (NASDAQ:NVDA) to Neutral from Outperform and slashed his price target to $133 from $215.
At the close of Q2 2022, 84 hedge funds were long NVIDIA Corporation (NASDAQ:NVDA) and held stakes worth $3.31 billion in the company. This is compared to 102 positions in the previous quarter with stakes worth $6.35 billion. The hedge fund sentiment for the stock is negative.
As of June 30, Fisher Asset Management owns roughly 7.6 million shares of NVIDIA Corporation (NASDAQ:NVDA) and is the largest shareholder in the company. The investment covers 0.81% of Ken Fisher’s 13F portfolio.
1. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 87
Advanced Micro Devices, Inc. (NASDAQ:AMD) designs and manufactures semiconductors for both business and consumer markets. On August 2, Advanced Micro Devices, Inc. (NASDAQ:AMD) announced earnings for the second quarter of fiscal 2022. The company’s earnings per share came in at $1.05 and beat estimates by $0.01. The company’s revenue for the quarter amounted to $6.55 billion, up 70.13% year over year, and outperformed expectations by $20.78 million.
While the company’s earnings outperformed estimates, Advanced Micro Devices, Inc. (NASDAQ:AMD) expects fiscal third quarter 2022 revenue to take a hit from demand slowdown in PCs. The company expects its revenue to fall to $6.7 billion for Q3 2022, while analysts expect the company to generate sales of roughly $6.81 billion in the quarter. Though the consumer segment is expected to have a negative impact on sales, Advanced Micro Devices, Inc. (NASDAQ:AMD) has a leading position in the data center market and the server market, which will help the company drive outperformance in the back half of 2022. For fiscal 2022, the company expects to deliver a revenue of $26.3 billion, up 60% year over year, primarily led by growth in its data center and embedded systems segments.
On August 3, Northland analyst Gus Richard raised his price target on Advanced Micro Devices, Inc. (NASDAQ:AMD) to $105 from $95 and reiterated an Outperform rating on the shares.
At the close of Q2 2022, 87 hedge funds were long Advanced Micro Devices, Inc. (NASDAQ:AMD) and held stakes worth $4.84 billion in the company. Of those, Fisher Asset Management was the top shareholder with stakes worth $1.92 billion.
You can also take a look at 12 Best Semiconductor Stocks To Invest In Right Now and 10 Cheap Semiconductor Stocks to Invest In Today.
