Top Semiconductor Stocks Are Grabbing Investors’ Attention
Semiconductor stocks outperform market
The semiconductor industry has taken the market by storm since mid-2016, with the iShares PHLX Semiconductor ETF (SOXX) outperforming the Technology ETF and the S&P 500 Index (SPY). Semiconductor stocks have risen 18.7% YTD (year-to-date), outperforming the S&P 500 Index, which has risen 12.7%.
Semiconductor stocks are expected to grow further as the industry undergoes a technology shift toward AI (artificial intelligence) and IoT (Internet of Things).
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Semi stocks for every investor
Semiconductor traders who bet on stock price volatility are gaining from stocks like Nvidia (NVDA) and Lam Research (LRCX), while dividend seeking investors are holding tight to Qualcomm (QCOM) and KLA-Tencor (KLAC).
Short-term investors are investing in growth stocks like Nvidia and Advanced Micro Devices (AMD), whereas long-term investors are looking for cheaper stocks like Intel (INTC) and Applied Materials (AMAT), which have strong growth potential in the future.
What’s driving growth in the semiconductor market?
Stock price depends upon investors’ confidence about the growth potential of a company. WSTS (World Semiconductor Trade Statistics) expects the global semiconductor market to grow 17% YoY (year-over-year) in 2017, after growing only 1.1% YoY in 2016.
The biggest growth should come from memory, and WSTS expects memory revenues to rise 50.5% YoY in 2017. Memory chips have Micron Technology (MU) and memory chip manufacturing equipment suppliers LRCX and AMAT into the limelight. Discrete semiconductors are expected to grow 9.7% YoY in 2017, which is driving AMD and NVDA.
In the IoT world, almost all electronic devices will be connected to the Internet and generate data. A connected device would require connectivity chips for the Internet, memory to collect and store data, and microprocessors to process data, thereby increasing semiconductor content per device. This technology shift would create opportunities not only at the device level but also for network infrastructures and data centers.
Notably, the last time semi stocks skyrocketed was in 2000, when the last technology shift toward mobile phones took place, and there’s always a possibility that history will repeat itself.
In this series, we’ll examine 26 semiconductor stocks and the top five semiconductor stocks across various variables that have drawn interest from different types of investors. Continue to the next part for a closer look at Nvidia and Intel.