On Wednesday, Nomura Instinet initiated coverage on semiconductor giants including Advanced Micro Devices (AMD), Intel (INTC), NVIDIA (NVDA), and Xilinx (XLNX). A lot of good news has surrounded the stocks recently including positive news from US-China trade discussions. Semiconductor stocks AMD, Intel, and NVIDIA were up ~8.5%, ~2.06%, and ~3.07%, respectively. However, Xilinx was down 0.40% on Wednesday.
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According to Nomura analyst David Wong, the semiconductor industry is going through a cyclical downturn and is likely to struggle throughout this year and possibly into 2020 too. Moreover, Wong expects a nearly 10% drop in chip sales in 2019. However, Wong expects the semiconductor sector to improve over the long term.
Nomura has initiated coverage of AMD and Intel with a “buy” rating. The analyst has given a price target of $33 to AMD and $65 to Intel. Nomura has initiated coverage of NVIDIA with a “neutral” rating and a price target of $147. Wong gave Xilinx a “neutral” rating and a $115 price target.
“We model long-term semiconductor annual sales growth of 7-9% from 2020 to 2025,” Wong wrote in a note. Wong believes that sales will grow on the back of new technologies such as artificial intelligence, autonomous driving, 5G communications, Internet of Things, and the continued buildout of global data center infrastructure.