According to experts, these semiconductor stocks could now be worthwhile

• Chip stocks had a weak start to the year due to inflation and Ukraine
• Semiconductor stocks may be cyclical, but experts say they have a long-term tailwind
• Analysts see particular potential for some stocks

The technology sector was hit hard at the start of the year due to fears of inflation and increasing tensions between Russia and Ukraine, which have now culminated in a Russian war of aggression. “Technology stocks have taken the brunt of the market correction over the past few months,” said market researcher Todd Campbell of TheStreet. The downside, however, is that favorable entry opportunities have arisen. Campbell is particularly interested in stocks in the semiconductor industry, which are valued cheaper than many software stocks and have earnings growth and a sustained tailwind.

Expert sees improving prospects for chip stocks

In fact, many chip stocks have also been affected by price setbacks in the recent past and have thus moved significantly away from their all-time highs achieved at the end of 2021. NVIDIA stock, for example, is currently trading at $272.86, still a good 21 percent below its record high of $346.47 from last November – although it has already gained around 16 percent in the last month ( Status: closing price on March 31, 2022). “Of course, there are no rules that say stocks have to trade back to past levels, but stocks tend to follow earnings over time and growing demand suggests that earnings [der Halbleiterhersteller] going up,” Campbell continued.

Above all, technological progress ensures that chips are built into more and more objects and have to keep getting better. “The electrification of everything is supporting demand and, in the case of semiconductor equipment, the renewed focus on excess production is bullish,” said TheStreet analyst. Among other things, Campbell sees positively that Intel is investing massively in new chip factories in Germany, Europe and the USA and that both the EU and the USA want to support the industry with billions through a special chip law in order to boost chip production . “Semiconductor stocks have historically been cyclical, making them prone to ups and downs. But countries and companies are spending big to overcome supply chain disruptions and geopolitical threats, and technological advances — including AI, machine learning and automation — are offering sustained tailwinds that could iron out some of the cyclicality,” Campbell said. However, knowing which stocks to buy is still a challenge.

MANGO and beyond – Semiconductor stocks with potential

The expert from “TheStreet” described the shares of NVIDIA and Applied Materials as “top stocks”. NVIDIA has leveraged its expertise in gaming graphics chips to target artificial intelligence, robotics, augmented reality and automotive sectors, making it one of the biggest beneficiaries of rising chip demand. Analyst Ross Seymore from Deutsche Bank also sees it similarly: “Basically, we continue to believe that NVIDIA is uniquely made to benefit from the growth of AI in hardware and possibly software,” he said, according to “CNBC”.

According to Campbell, Applied Materials – as one of the leading providers of fine material technology solutions for the semiconductor industry – should also gain momentum from the fact that chip production is being expanded worldwide. The growth of Applied Materials should “benefit pleasantly from the increasing complexity of smaller, more powerful chips and global investment in excess production,” believes the expert.

According to “Seeking Alpha”, analysts at Bank of America also recently identified some semiconductor stocks with potential, which they summarized under the acronym “MANGO”. In addition to Marvell Technology, this also includes AMD, Analog Devices and Broadcom – whose ticker symbols all start with an “A” – as well as NVIDIA, GLOBALFOUNDRIES and ON Semiconductor. According to “Seeking Alpha”, the BofA analysts are “highly convinced” of the MANGO shares, but the experts are also generally confident with regard to the potential of chip shares, since “the structural importance of semiconductors for the rapidly digitizing world economy cannot be overestimated”.

Axcelis Technologies stock could also be worth a look, according to The Motley Fool. The company supplies semiconductor manufacturers with devices such as ion implanters that are required for chip production and was able to record the best year in the company’s history in 2021. Going forward, The Motley Fool assumes that demand for Axcelis products will continue to rise strongly due to the expansion of semiconductor production.

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