In this article, we discuss the 5 stocks that benefit from global chip shortage. If you want to read our detailed analysis of these stocks, go directly to the 10 Stocks That Benefit from Global Chip Shortage.
5. Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM)
Number of Hedge Fund Holders: 64
Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) is ranked fifth on our list of 10 stocks that benefit from global chip shortage. The firm markets semiconductors and related products and is headquartered in Taiwan.
On June 22, investment advisory Argus initiated coverage of Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) stock with a Buy rating and a price target of $150, appreciating a new five-year capital spending plan of the company.
At the end of the second quarter of 2021, 64 hedge funds in the database of Insider Monkey held stakes worth $10.6 billion in Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM), down from 76 in the preceding quarter worth $10.8 billion.
In its Q1 2021 investor letter, Bonsai Partners, 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:
“Taiwan Semiconductor is the world’s largest outsourced foundry of logic semiconductor chips. TSMC’s shares appreciated 8.9% during the quarter.
Similar to last quarter, the supply-demand imbalance in semiconductor chips continues to benefit TSMC. To fuel new technological advances and meet the current supply imbalance, we see significantly increased capital spending across the industry over the coming years.
TSMC has an extraordinary track record of return on these large investments despite their rapid historical cadence of expansion. I remain hopeful that the large capital expenditure plan they now have ($100 billion of investment over the next three years) will be money well spent and not lead to industry oversupply in the medium term. Hopefully, future returns on these investments will look as good as those of the past.”
4. Applied Materials, Inc. (NASDAQ: AMAT)
Number of Hedge Fund Holders: 73
Applied Materials, Inc. (NASDAQ: AMAT) is a California-based firm that provides equipment, software, and other services to the semiconductor industry. It is placed fourth on our list of 10 stocks that benefit from global chip shortage.
On August 20, investment advisory Mizuho maintained a Buy rating on Applied Materials, Inc. (NASDAQ: AMAT) stock and raised the price target to $161 from $158, appreciating the “solid” quarterly earnings of the company.
Out of the hedge funds being tracked by Insider Monkey, London-based investment firm Generation Investment Management is a leading shareholder in the firm with 4.4 million shares worth more than $630 million.
3. Intel Corporation (NASDAQ: INTC)
Number of Hedge Fund Holders: 78
Intel Corporation (NASDAQ: INTC) is a California-based firm that sells essential technologies for smart devices. It is ranked third on our list of 10 stocks that benefit from global chip shortage.
On July 23, investment advisory BMO Capital maintained an Outperform rating on Intel Corporation (NASDAQ: INTC) stock but lowered the price target to $70 from $75, noting that the gross margins for the firm in the second quarter were high but compression was expected.
At the end of the second quarter of 2021, 78 hedge funds in the database of Insider Monkey held stakes worth $6.7 billion in Intel Corporation (NASDAQ: INTC), down from 83 in the previous quarter worth $7.6 billion.
2. NVIDIA Corporation (NASDAQ: NVDA)
Number of Hedge Fund Holders: 86
NVIDIA Corporation (NASDAQ: NVDA) is placed second on our list of 10 stocks that benefit from global chip shortage. The firm operates as a visual computing company and is headquartered in California.
On August 20, investment advisory Benchmark assumed coverage of NVIDIA Corporation (NASDAQ: NVDA) stock with a Buy rating and a price target of $230, underlining that the firm had plenty of opportunity for growth in the coming months.
At the end of the second quarter of 2021, 86 hedge funds in the database of Insider Monkey held stakes worth $9 billion in NVIDIA Corporation (NASDAQ: NVDA), up from 80 the preceding quarter worth $6 billion.
In its Q1 2021 investor letter, Vulcan Value Partners, an asset management firm, highlighted a few stocks and NVIDIA Corporation (NASDAQ: NVDA) was one of them. Here is what the fund said:
“NVIDIA Corp. is the dominant supplier of Graphics Processing Units (GPUs) worldwide. NVIDIA’s GPUs are at the intersection of a number of important computing trends including the movement to the Cloud, artificial intelligence, autonomous vehicles, edge computing, gaming, and more. We previously owned NVIDIA and sold it in the third quarter of 2020 as the price to value gap closed and our margin of safety was reduced. As with all our MVP companies, we continued to follow NVIDIA closely. Since that time, NVIDIA reported excellent results and its value has compounded rapidly. The technology selloff at the beginning of the year negatively affected the stock price while our estimate of NVIDIA’s value per share increased. This happy combination of events created a margin of safety and an opportunity to once again add NVIDIA to the portfolio.”
1. Micron Technology (NASDAQ: MU)
Number of Hedge Fund Holders: 87
Micron Technology (NASDAQ: MU) is ranked first on our list of 10 stocks that benefit from global chip shortage. The company makes and sells memory and storage products and operates from Idaho.
On July 1, investment advisory KeyBanc maintained an Overweight rating on Micron Technology (NASDAQ: MU) stock and raised the price target to $120 from $115, noting that the firm had posted strong results and guidance in the second quarter.
At the end of the second quarter of 2021, 87 hedge funds in the database of Insider Monkey held stakes worth $6.3 billion in Micron Technology (NASDAQ: MU), down from 100 in the preceding quarter worth $7.6 billion.
In its Q1 2021 investor letter, Bonsai Partners, an asset management firm, highlighted a few stocks and Micron Technology (NASDAQ: MU) was one of them. Here is what the fund said:
“Micron is a manufacturer of memory semiconductor chips. Micron appreciated 17.3% during the quarter.
With the semiconductor cycle in full swing, sentiment continued to improve for major DRAM and NAND suppliers. Spot pricing for DRAM continues its upward march due to supply shocks across the industry and sustained demand levels that continue to outstrip supply.
As a result, Micron showed improving results for the fiscal first quarter, raised guidance intra-quarter for the fiscal second quarter, and offered strong guidance for the fiscal third quarter in both growth and margins.
While the cyclical nature of DRAM hasn’t changed, the cycles themselves continue to become more benign, leading to long-term economic improvement across these businesses. Micron is now continuously profitable, with industry players in a dramatically stronger position than even just five years ago.
The biggest negative surprise in the quarter came from Micron’s exit from its 3D XPoint hybrid memory business. The company also announced its decision to sell its accompanying Utah fab. Fortunately, this development does not alter the investment thesis much since 3D XPoint was an option ticket for future growth. While it’s unfortunate this product didn’t pan out, now is an excellent time to sell a fab, so perhaps it is a blessing in disguise?”
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