Is It Time To Buy Semiconductor Stocks?
🌟🌟🌟Semiconductors are the Brains of Modern Electronics and a critical component in millions of Electronic Devices. The first 8 months of 2023 have been highly profitable for semiconductor stock investors with VanEck Semiconductor ETF (SMH) up 46% year todate.
However in the past 3 months, semiconductor sector performance has slowed down. Multiple growth drivers for the semiconductor industry still remain. These include Artificial intelligence, virtual reality, 5G, cryptocurrencies, gaming and cloud computing, all of which are reliant on computer microchips.
leads the pack with its share price up a massive 207% year todate. This is due to the huge demand for its AI chips that are used to process a wide range of AI machine learning. Nvidia's growth has been truly monumental. Since 2009, Nvidia's Market capitalisation has grown by 17,000% to USD 1.1 Trillion in 2023. Nvidia has had 2 consecutive reports delivering blow out numbers! However Nvidia's share price has dropped from its all time high of USD 502.66 to USD 439.66 currently. I believe that Nvidia is in a Buy Zone as Wall Street Analysts are bullish on Nvidia with Target price of USD 654.73, an upside potential of almost 50%.
$Taiwan Semiconductor Manufacturing(TSM)$
Is the largest semiconductor manufacturer in the world, making about 60% of the world's chip supply but more than 90% of the most advanced chips. Even Nvidia outsource their chip manufacturing to TSMC.
TSMC's share price is up 20% year todate. Analysts are upbeat about TSMC with a Target Price of USD 113.41, an upside potential of 27%.
has seen its share price dropped by 13% in the past 3 months. However AMD is still up 60% year todate. The demand for personal computers and data centre components has tapered down in the past 3 months. These are 2 key areas for AMD. It is also falling behind Nvidia in the GPU market which Nvidia controls 87% of the market place.
Investors are hoping that the new Instinct MI300 series chips will accelerate AMD's Generative AI chip processing revenues. Scheduled for release in 4th quarter of 2024, AMD's new chips should make a big dent in Nvidia's AI chip dominance in the next 2 years.
Wall Street Analysts are also bullish on AMD with a Target price of USD 145.00, a 41% increase.
Share price is up 42% year todate. Intel is well positioned to pop further in the China US trade tensions that have semiconductor fabrication manufacturers caught in the crosshairs. Intel is one of the largest semiconductor fab developers in the world. Intel is ready to roll out its Meteor Lake PC chips in late 2023. In 2024, Intel will introduce its next generation Granite Rapids and Sierra Forest server CPU units which will help increase Intel's revenue.
Analysts are mixed on Intel with a Target price of USD 37.00 compared to its closing price of USD 37.99 today.
$Semiconductor Bull 3X Shares(SOXL)$
Is used for short term trading of the semiconductor shares with a 3 times leverage target. It is currently up 112% year to date but down 4% in the past 5 days.
The US China trade tensions have curbed semiconductor performance recently. US goods imports from China were down 25% for the first 6 months of 2023. But in the long run, with the continuing exponential growth on Artificial Intelligence, Semiconductor stocks will take off to the moon!
Personally, I prefer to invest in VanEck Semiconductor ETF (SMH) which have 25 of the best semiconductor stocks in just 1 trade. Nvidia takes up 20% with TSMC in the 2nd place at 10%. SMH ETF offers great value for money and is a lot cheaper than buying individual stocks. Just comparing SMH's last closing price of USD 147.30 to Nvidia 's closing price of USD 439.66, SMH gives me the maximum bang for my bucks. Even though the current dividend yield is 1.64%, the money is in the compound growth of its share price.
Before the chips get hot again, Semiconductor stocks are great way to supercharge our portfolio to capture a lion's share in the growth of Artificial intelligence. So the current Bearish markets offer a golden opportunity to invest in good quality semiconductor stocks to hold for the long term.
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As a TSM stockholder I worry that the massive costs and difficulties of its worldwide expansion will result, as soon as 2026, in its pricing itself out of the future AI market.
Intel has historically used every opportunity to delay. Not sure why we would expect anything different this time around..
Given the valuations, TSM is the cheapest and most value for the money player in the entire chain. At 15x it is a no-brainer.
Intel is way too far behind and even if they manage to get EUV and sub-7nm working at scale, which will still take time
i think NVDA will disappoint within next 2 qtrs, not due to demand but ability to supply.