In this piece, we will take a look at the top ten stocks that hedge funds are buying in 2022. If you want to skip our introduction to the semiconductor industry and jump ahead to the top five stocks in this list, then take a look at Hedge Funds are Buying These 5 Semiconductor Stocks in 2022.
Semiconductors remain an ever-green area for investments and innovation as the world’s appetite for new technology keeps growing. According to McKinsey, the semiconductor industry grew by 20% to stand at a whopping $600 billion in value by the end of 2020. Looking at the future, McKinsey also believes that the sector might grow at an average ranging between 6% to 8% by 2030, resulting in a massive valuation of $1 trillion.
Another report by the Semiconductor Industry Association (SIA), which is an American organization that advocates the interests of U.S. chip firms to the government, presents more recent estimates for the sector. It outlines that global semiconductor sales stood at $556 billion last year, and the year was particularly beneficial to the companies as populations all over the world switched gears indoors for their work and entertainment needs — a shift that drove demand for personal computers, smartphones, and tablet computers.
Even though the industry is one of the most crucial ones today, it does not consist of a hefty number of players and is bifurcated along a few categories. For instance, most of the central processing units (CPUs), semiconductors that power desktop computers, notebooks, large data centers, smartphones, tablets and other similar devices, are sold by either Advanced Micro Devices, Inc. (NASDAQ:AMD), Intel Corporation (NASDAQ:INTC) or QUALCOMM Incorporated (NASDAQ:QCOM). Similarly, graphics processing units (GPUs), which are relatively newer computing parts, are sold primarily by NVIDIA Corporation (NASDAQ:NVDA) or AMD. Finally, reflecting the few players in the CPU and GPU industries, the bulk of both of these products are manufactured either by Intel or the Taiwan Semiconductor Manufacturing Company (NYSE:TSM).
Our Methodology
In order to discover top hedge fund semiconductor stock picks, we studied the portfolios of 912 funds as per their 13F filings with the Securities and Exchange Commission (SEC) for Q1 2022. Once the firms with the highest investors were identified, they were then analyzed through their earnings reports, analyst ratings, and other details such as relevant industry developments to paint a holistic picture.
Hedge Funds are Buying These Ten Semiconductor Stocks in 2022
10) Marvell Technology, Inc. (NASDAQ:MRVL)
Number of Hedge Fund Holders: 63
Marvell Technology, Inc. (NASDAQ:MRVL) is an American company that provides various semiconductor products. These are primarily related to communications, signals processing, and storage. Some of the products that the company provides are signals processors, storage devices, application processors, and adapters. It has a diverse customer base in several countries and is headquartered in Wilmington, Delaware.
Marvell Technology, Inc. (NASDAQ:MRVL)’s first fiscal quarter earnings saw the company beat Wall Street analyst estimates for both revenue and non-GAAP EPS. This beat came at a time when worries about a slowdown in the semiconductor sector are persistent, and the firm posted $1.45 billion in revenue and $0.52 in non-GAAP EPS.
Despite the beat, BMO Capital lowered Marvell Technology, Inc. (NASDAQ:MRVL)’s price target to $82 from $98 in May 2022, as it shared its belief that the company’s earnings multiples are due for a revision. At the same time, the firm outlined that the semiconductor company met expectations for the growing data center segment. Insider Monkey’s Q1 2022 survey of 912 hedge funds outlined that 63 had also invested in Marvell Technology, Inc. (NASDAQ:MRVL).
Marvell Technology, Inc. (NASDAQ:MRVL)’s largest investor is Alex Sacerdote’s Whale Rock Capital Management which owns 3.8 million shares that are worth $274 million.
Intel Corporation (NASDAQ:INTC), Advanced Micro Devices, Inc. (NASDAQ:AMD), and the Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) are met by Marvell Technology, Inc. (NASDAQ:MRVL) in our list of top chip stocks.
9) Analog Devices, Inc. (NASDAQ:ADI)
Number of Hedge Fund Holders: 67
Analog Devices, Inc. (NASDAQ:ADI) is a semiconductor company that focuses its attention on developing, designing, testing, and selling products that primarily cover signals processing. These are used in a variety of personal computing devices such as desktops, notebooks, and smartphones. Additionally, the company also provides products for cellular infrastructure and aerospace companies. Some of its products include performance amplifiers, accelerometers, gyroscopes, and inertial measurement units.
As its fiscal second quarter came to an end, Analog Devices, Inc. (NASDAQ:ADI) reported that it had earned $2.9 billion in revenue and $2.40 in non-GAAP EPS, beating analyst estimates for both metrics. The company guided $3 billion in revenue for the current quarter, above analyst estimates.
Truist raised Analog Devices, Inc. (NASDAQ:ADI)’s price target to $203 from $194 in May 2022, alongside keeping a buy rating for the shares. It praised the company’s strong earnings and shared that potential headwinds for the semiconductor sector merit some caution when analyzing the firm’s future. By the end of 2022’s January quarter, 67 out of the 912 hedge funds polled by Insider Monkey had also bought the company’s shares.
John Armitage’s Egerton Capital Limited is Analog Devices, Inc. (NASDAQ:ADI)’s largest investor. It owns 3.7 million shares that are worth $615 million.
8) Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 71
Broadcom Inc. (NASDAQ:AVGO) designs and sells a variety of semiconductor devices that target several markets and products. Its products are used as modems in smartphones, as processors in devices such as smart television setup boxes, Bluetooth chips in several devices, and processors for global positioning system (GPS) products. The company is headquartered in San Jose, California, United States.
Broadcom Inc. (NASDAQ:AVGO)’s fiscal Q2 results revealed that it had raked in $8 billion in revenue and $9.07 in non-GAAP EPS, for a strong set of results that beat Wall Street analyst estimates for both metrics. Subsequently, the company’s share price appreciated by 1.6% in pre market trading. Additionally, it guided its revenue for the third fiscal quarter at $8.4 billion, which was roughly $400 million above consensus estimates.
KeyBanc raised the company’s share price target to $780 from $720 in May 2022. It based the decision on Broadcom Inc. (NASDAQ:AVGO)’s plan to acquire VMware, stating that the deal will boost the company’s existing business model. Insider Monkey studied 912 hedge fund holdings for the first quarter of this year and discovered that 71 had invested in the company.
Broadcom Inc. (NASDAQ:AVGO)’s largest investor is Ken Fisher’s Fisher Asset Management which has an $894 million stake that comes through 1.4 million shares.
7) QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 73
QUALCOMM Incorporated (NASDAQ:QCOM) is one of the largest semiconductor companies in the world. The firm designs and sells a host of chip products such as central processing units (CPUs), graphics processing units (GPUs), and modems. Its products are used in smartphones, notebooks, tablets, and other gadgets. It is based in San Diego, California, United States.
In May 2022, QUALCOMM Incorporated (NASDAQ:QCOM) announced that its subsidiary had entered into a partnership with Advanced Micro Devices, Inc. (NASDAQ:AMD) through which the pair will develop wireless capabilities for products that use AMD’s CPUs. By the end of Q1 2022, out of the 912 hedge funds tracked by Insider Monkey, 73 held a stake in QUALCOMM Incorporated (NASDAQ:QCOM).
For its second fiscal quarter, QUALCOMM Incorporated (NASDAQ:QCOM) raked in $11 billion in revenue and $3.21 in non-GAAP EPS, marking a strong performance by beating Wall Street estimates for both. Subsequently, Tigress Financial raised its price target to $238 from $195 in May 2022, stating that the company’s diversification strategies are bearing fruit.
Panayotis Takis Sparaggis’s Alkeon Capital Management is QUALCOMM Incorporated (NASDAQ:QCOM)’s largest investor. It owns 4 million shares that are worth $626 million.
6) Applied Materials, Inc. (NASDAQ:AMAT)
Number of Hedge Fund Holders: 74
Applied Materials, Inc. (NASDAQ:AMAT) is a backend semiconductor company that is engaged in the chip manufacturing process. It provides equipment that allows chipmakers to design and test their designs both before and after the manufacturing process. The firm is headquartered in Santa Clara, California, United States.
Applied Materials, Inc. (NASDAQ:AMAT) reported that it had missed analyst non-GAAP EPS estimates during its second fiscal quarter by posting $1.85 in the segment. However, it beat revenue estimates by bringing in $6.2 billion. As this year’s first quarter came to a close, 74 out of 912 hedge funds polled by Insider Monkey had invested in the company.
Following the miss, Citi lowered the company’s share price target to $160 from $175 in May 2022, outlining that market multiples have dropped but the company is well positioned in the industry.
Applied Materials, Inc. (NASDAQ:AMAT)’s largest investor is David Blood and Al Gore’s Generation Investment Management which owns a $560 million stake in the company.
Advanced Micro Devices, Inc. (NASDAQ:AMD), Intel Corporation (NASDAQ:INTC), and the Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) are met by Applied Materials, Inc. (NASDAQ:AMAT) in some of the chip stocks that investors held on to this year.
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Disclosure: None. Hedge Funds are Buying These 10 Semiconductor Stocks in 2022 is originally published on Insider Monkey.
