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Are These the Best Semiconductor Stocks You Can Buy Right Now?
Investors know that 2020 was a fantastic year on the stock market for semiconductor stocks. The question now arises as to whether this trend will continue. Will the global chip shortage be good or bad for these companies? Well, that really depends on what role these companies play in the industry. If we look at a company like Apple Inc (NASDAQ: AAPL), whose devices are chip-based, sales would likely be impacted as it would make it difficult for the company to meet demand for its marquee gadgets.
On the other hand, if we look at companies that supply chips like ON Semiconductor Corp (NASDAQ: ON), this would likely benefit the company as the demand for its product is high. Rising prices and higher capacity utilization would ultimately lead to strong financial results. As an investor, knowing what you are investing in is of the utmost importance. So if you know what role each company is playing in this crisis, you can benefit in the long term. No matter what, do you still see this sector as an opportunity to invest in it? If so, then here are some of the best semiconductor stocks to look out for in the stock market today.
Top Semiconductor Stocks To See Now
Advanced Micro Devices, Inc.
First, we have the global semiconductor company Advanced Micro Devices (AMD). The company develops computer processors and related technologies for businesses and consumer markets. Major products include microprocessors, motherboard chipsets, embedded processors, and graphics processors. The AMD share has been trading sideways since the beginning of the year. That being said, it may go unnoticed that the stock is up over 35% over the past year.
The company announced its first quarter results late last month. AMD had sales of $ 3.45 billion, an increase of 93% over the previous year. Operating income for the quarter was $ 662 million while net income was $ 555 million, an increase of 243% year over year.
Not to mention, AMD announced last week that it would purchase $ 1.6 billion worth of wafers from GlobalFoundries between 2022 and 2024. GlobalFoundries supplies the 14nm I / O chips that are 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 the global semiconductor shortage and record high demand. With that in mind, would you add AMD stocks to your watchlist?
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Applied Materials, Inc.
Next up is Applied Materials (AMAT), which provides manufacturing equipment, services and software for the global semiconductor industry. The company's core end markets essentially include the consumer technology and renewable energy industries. The company targets semiconductor giants such as Taiwan Semiconductor and Samsung (OTCMKTS: SSLNF). The AMAT share has been on an upward trend for a year. In fact, the value more than doubled in the reporting period. The company is expected to release its second quarter earnings report after the market closes today. Therefore, investors would watch carefully whether the AMAT share can continue its momentum.
In April, the company announced the launch of Alx, which stands for Actionable Insight Accelerator. This would strengthen the company's AI and machine learning capabilities in the wafer manufacturing space. In particular, AIx is a platform based on Big Data and AI that supports the development and deployment of new chip technologies by allowing engineers to check semiconductor processes in real time.
Additionally, even CNBC's Jim Cramer suggested keeping an eye on AMAT stock. “This is the stock to watch for because it had an incredible quarter. One of the best neighborhoods in the world, ”said Jim Cramer earlier this month. Would the AMAT share be an investment opportunity at this point in time?
ASML Holding is a manufacturer of systems for the production of chips. The company develops, manufactures, markets, sells and services semiconductor equipment systems, which consist of lithography systems. Products include systems and installed base products and services. ASML also offers NXE systems that are equipped with extreme ultraviolet (EUV) light source technology. The ASML share was one of the clear winners on the stock exchange last year. The price almost doubled in the reporting period.
In April ASML reported the results for the first quarter. The company had sales of $ 5.35 billion and net income of $ 1.58 billion. Strong demand in all markets has driven expected sales growth to 30% in 2021. The main driver for higher sales and gross margins was the increased installed base business.
With the current high-demand environment, customers are using software upgrades to increase capacity as quickly as possible. Given the stock's momentum and growth potential, would it be worth watching ASML stock now?
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Taiwan Semiconductor Manufacturing Co. Ltd.
Last on the list is semiconductor giant Taiwan Semiconductor Manufacturing Company (TSM). It is mainly engaged in the manufacture and sale of integrated circuits and semiconductor products. It is noteworthy that the company is the world's largest semiconductor manufacturer.
Accordingly, you would expect it to benefit significantly from the increasing demands on semiconductors around the world. While fundamentals remain strong, the stock has been moving sideways since the start of the year. It's easy to forget, then, that TSM stock more than doubled in the past year.
TSM announced its financial figures for the first quarter back in April. TSM revenue increased 25.4% year over year to $ 12.9 billion. It was the third straight quarter of the company's record sales as the global economy recovered from the coronavirus pandemic. In addition, the company's board of directors has approved spending of $ 2.89 billion to increase capacity. This is part of TSM's $ 100 billion investment plan over the next three years. Given its market leadership position in a high demand sector, would this be an opportunity to add TSM stock?