What’s behind Semiconductor Stocks’ Rise?

Most semiconductors stocks had risen more than 2% as of midday today, with several factors having raised investors’ optimism about the sector’s growth.

Puja Tayal - Author

Nov. 20 2020, Updated 11:12 a.m. ET


Semiconductor stocks rise on growth prospects

Most semiconductors stocks had risen more than 2% as of midday today, with several factors having raised investors’ optimism about the sector’s growth. The VanEck Vectors Semiconductor ETF (SMH) rose 3.11%, with the biggest growth coming from Broadcom (AVGO), which rose 10.6% after the company maintained its strong fiscal 2019 earnings outlook. It expects growth in wireless and networking to rebound significantly in the second half.

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Wireless and networking

Broadcom’s guidance revived investors’ confidence in the networking and smartphone markets, sending stocks with exposure to these two markets up more than 2%. Analog and radio-frequency chip suppliers Skyworks Solutions, Microchip Technology, and Texas Instruments (TXN) rose 4.4%, 3.3%, and 2.5%, respectively, in today’s first half.

NVIDIA (NVDA) and Intel (INTC) rose 2.85% and 1.7% on Broadcom’s guidance for high networking demand. Intel is a player in the networking space, and NVIDIA’s acquisition of Mellanox is set to expose it to data center networking.

Memory chips

A DigiTimes report on a slowdown in NAND (negative AND) price declines and an optimistic Citigroup analyst report drove memory stocks upwards. DigiTimes reported that Samsung (SSNLF) has made aggressive cuts in NAND prices in the first quarter. Sources stated that these cuts could help the supply chain absorb excess inventory by late March or early April and narrow NAND price declines to single-digit percentages in the second quarter. They expect NAND demand to rise in the third quarter as server demand picks up.

According to StreetInsider, Citigroup analyst Atif Malik raised his price target for Lam Research (LRCX) to $215, implying an 18% upside from the stock’s current trading price. He stated that channel checks have shown that NAND orders have picked up at Lam, indicating an increase in NAND capital spending. This report sent LRCX stock and peer Applied Materials (AMAT) up 4.68% and 5.67% today.

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