Are These The Top Semiconductor Stocks To Buy Right Now?
It is a known fact to investors that semiconductor stocks have had a fantastic year in the stock market in 2020. Now the question on everyone’s mind would be, will this trend continue? Will the global chip shortage be a good or a bad thing for these companies? Well, this truly depends on what role these companies play in the sector. If we are looking at a company such as Apple Inc (NASDAQ: AAPL) which relies on chips for its gadgets, then its sales would probably be affected as this would complicate the company’s ability to meet the demand for its marquee gadgets.
On the flip side, if we are looking at companies that supply chips such as ON Semiconductor Corp (NASDAQ: ON), then this would likely benefit the company as demand for its product is on a high. Rising prices and higher capacity utilization would ultimately result in strong financial results. As an investor, knowing what you’re investing in is paramount. So, knowing what roles each company plays in this crisis could well benefit you in the long run. All things considered, do you still see this sector as an opportunity to invest in? If so, then here are some of the best semiconductor stocks to watch out for in the stock market today.
Top Semiconductor Stocks To Watch Now
- Advanced Micro Devices, Inc (NASDAQ: AMD)
- Applied Materials, Inc (NASDAQ: AMAT)
- ASML Holding (NASDAQ: ASML)
- Taiwan Semiconductor Manufacturing Co. Ltd (NYSE: TSM)
Advanced Micro Devices, Inc
First up, we have the global semiconductor company, Advanced Micro Devices (AMD). The company develops computer processors and related technologies for both businesses and consumer markets. Its main products include microprocessors, motherboard chipsets, embedded processors, and graphic processors. AMD stock has been trading sideways since the start of the year. That being said, it may go unnoticed that the stock has been up by over 35% for the past year.
Late last month, the company reported its first-quarter earnings. AMD reported revenue of $3.45 billion, up by 93% year-over-year. Also, operating income for the quarter was $662 million while net income was $555 million, a 243% increase from the prior year.
Not to mention, last week, AMD announced its plans to purchase $1.6 billion worth of wafers from GlobalFoundries in the 2022 to 2024 timeframe. GlobalFoundries supplies the 14 nm I/O dies that are a part of AMD’s second and third-generation Epyc server chips. In particular, AMD is renegotiating its Wafer Supply Agreement to secure additional capacity in the face of global semiconductor shortages and record-high demand. With this in mind, would you add AMD stock to your watchlist?
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Applied Materials, Inc
Next, the company that provides manufacturing equipment, services, and software to the global semiconductor industry, Applied Materials (AMAT). Essentially, the company’s core end markets include the consumer tech and renewable energy industries. The company caters to semiconductor giants such as Taiwan Semiconductor and Samsung (OTCMKTS: SSLNF). AMAT stock has been on an upward trajectory for the past year. In fact, it has more than doubled in value during the period. The company is scheduled to announce its second-quarter earnings report after the market closes today. Hence, investors would be watching closely to see if AMAT stock can continue its momentum.
Back in April, the company announced the introduction of Alx, which stands for Actionable Insight Accelerator. This would bolster the company’s AI and machine learning capabilities in the wafer fabrication space. Notably, AIx is a platform powered by big data and AI, which helps develop and deploy new chip technologies by allowing engineers to check semiconductor processes in real-time.
Furthermore, even CNBC’s Jim Cramer suggested keeping an eye on AMAT stock. “This is the stock to watch because they reported an unbelievable quarter. One of the best quarters in the world,” said Jim Cramer earlier this month. Therefore, would AMAT stock be an investment opportunity at this point?
ASML Holding is a manufacturer of chip-making equipment. The company engages in developing, producing, marketing, selling, and servicing semiconductor equipment systems, consisting of lithography systems. Its products include systems, and installed base products and services. ASML also offers NXE systems, which are equipped with extreme ultraviolet (EUV) light source technology. ASML stock has been one of the clear winners in the stock market in the past year. It has almost doubled in price during the period.
In April, ASML reported its first-quarter earnings. The company reported revenue of $5.35 billion and net income of $1.58 billion. The strong demand across markets has driven expected sales growth towards 30% in 2021. The primary driver for higher revenue and gross margins was the increased Installed Base business.
Due to the current high-demand environment, customers are utilizing software upgrades to increase capacity as quickly as possible. Given the momentum of the stock as well as the growth potential, would ASML stock be worth watching now?
Taiwan Semiconductor Manufacturing Co. Ltd
Last on the list, the semiconductor giant, Taiwan Semiconductor Manufacturing Company (TSM). It principally engages in the manufacturing and sale of integrated circuits and semiconductor products. It is noteworthy that the company is the largest semiconductor manufacturer globally.
Accordingly, you would expect that it would stand to benefit significantly from increasing worldwide demands for semiconductors. While the fundamentals remain strong, the stock has been moving sideways since the start of the year. Thus, it is easy to forget that TSM stock has more than doubled over the past year.
Back in April, TSM announced its first-quarter financial figures. TSM’s revenue came in 25.4% higher year-over-year to $12.9 billion. It was the company’s third straight quarter of record sales as the global economy rebounds from the coronavirus pandemic. Furthermore, the company board has also approved $2.89 billion in spending to increase capacity. This is part of TSM’s $100 billion investment plan over the next three years. Therefore, with its market-leading position in a sector with high demand, would this be an opportunity to pick up TSM stock?