In this piece, we will take a look at ten semiconductor stocks that are popular on Reddit. If you want to skip our industry background and take a look at the top five stocks in this list, then head on over to These 5 Semiconductor Stocks Are Popular On Reddit.
It's a no brainer that the semiconductor sector is crucial to the modern day global economy. As a testament to this fact, there are a host of research reports out there that have optimistic outlooks for the industry. For instance, a report by DataM Intelligence that was released in mid July estimates a compounded annual growth rate (CAGR) for the chip sector to sit at 7.4% from this year to 2029. Through this, the sector will be worth $1 trillion by 2029, with several other sectors such as machine learning and artificial intelligence slated to fuel this growth.
Another report, this time from IDC, suggests that by the end of this year, the semiconductor industry will have generated a whopping $622 billion in revenue. This will mark for 13.7% annual growth from last year's cumulative revenues of $582 billion. IDC also revealed that last year, the top ten chip companies in the world were responsible for generating 58% of the total revenue, while the top 20 firms held 76% of the market.
Finally, Fortune Business Insights estimates that the chip sector was worth $527 billion in 2021 and over the course of the next seven years, it will grow from an estimated worth of $573 billion by the end of 2022 to $1.4 trillion by the end of 2029, to reflect a CAGR of 12.2%.
Therefore, it's clear that the semiconductor sector has a bright future ahead of it, and for today's coverage we decided to take a look at which chip stocks are holding the attention of retail investors on the social media platform Reddit. The industry itself is divided into several segments, with some companies dealing with consumer and enterprise products, others with basic products necessary for the functioning of nearly every gadget out there, and the remaining responsible for chip fabrication. On Reddit, users are talking about all these categories, to represent a diverse set of opinions.
Photo by Umberto on Unsplash
In order to sift out some of the top chip stocks on Reddit, we scanned through several threads on the social media platform. Stocks were then picked out based on reader interest and user engagement on the website. Some of the Reddit communities that we scanned for today's list are r/Stocks, r/WallStreetBets, and r/Investing, with some of the threads having more than a hundred comments from users sharing their takes on the semiconductor industry. The stocks have then been ranked by the number of hedge funds out of 912 that Insider Monkey surveyed Q1 2022 that had held a stake in them.
These 10 Semiconductor Stocks Are Popular On Reddit
10. iShares Semiconductor ETF (NASDAQ:SOXX)
Number of Hedge Fund Holders: 8
iShares Semiconductor ETF (NASDAQ:SOXX) is an exchange traded fund (ETF) that focuses on stocks in the semiconductor industry. The ETF tracks the ICE Semiconductor Index (TR) and has a total market capitalization of $6.4 billion. The fund tracks 30 U.S. listed chip stocks, and its latest price to book (P/B) ratio is 4.46, and 30 day SEC yield is 1.15%.
Out of the 30 constituent firms, the largest holding in the iShares Semiconductor ETF (NASDAQ:SOXX) is in the shares of Broadcom Inc. (NASDAQ:AVGO). This company is primarily responsible for designing and selling networking chips and products and the firm is expected to benefit from a growth in data centers and cloud computing according to a research note issued by the investment bank JPMorgan in July 2022. 8 hedge funds out of the 912 polled by Insider Monkey during Q1 2022 had held stakes in the ETF.
Along with Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), NVIDIA Corporation (NASDAQ:NVDA), and Advanced Micro Devices, Inc. (NASDAQ:AMD), iShares Semiconductor ETF (NASDAQ:SOXX) is another chip stock making waves on Reddit.
9. ASML Holding N.V. (NASDAQ:ASML)
Number of Hedge Fund Holders: 46
ASML Holding N.V. (NASDAQ:ASML) is the only company in the world that is capable of making machines that can manufacture leading edge semiconductors. These machines are used by all of the world's largest chip manufacturers, and the company holds a monopoly in the market for extreme ultraviolet lithography (EUV) chip machines. The firm is headquartered in Veldhoven, Netherlands.
The strongest point for ASML Holding N.V. (NASDAQ:ASML) is the fact that it is the only player in its industry of high end chip manufacturing machines. Therefore, chipmakers such as Intel Corporation (NASDAQ:INTC) and the Taiwan Semiconductor Manufacturing Company (NYSE:TSM) are eager to get their orders first to the company to secure the equipment and gain an edge in their markets.
ASML Holding N.V. (NASDAQ:ASML)'s second quarter earnings were released in July 2022 and they revealed that not only did the firm beat analyst estimates but that it had net bookings of €8.5 billion. This was a new quarterly record and demonstrated the strength of the company's business model. Insider Monkey's Q1 2022 survey of 912 hedge funds outlined that 46 had bought the company's shares.
ASML Holding N.V. (NASDAQ:ASML)'s largest investor is Ken Fisher's Fisher Asset Management which owns 4.5 million shares that are worth $2.9 billion.
ClearBridge Investments mentioned ASML Holding N.V. (NASDAQ:ASML) in its first quarter of 2022 investor letter to state that:
“During the quarter, we reduced our semiconductor exposure through the trim of ASML (NASDAQ:ASML) to manage concerns of a slowdown due to the risk of double ordering and potential softness in some consumer end markets. We increased our position in IT services with the purchase of Accenture as we remain optimistic about the long-term growth potential these companies provide, which is underpinned by the compressed digital transformation cycle, rising cloud adoption and growth in data-driven insights.
Despite the market volatility and hyper focus on rising rates, chief information officer surveys continue to forecast resilience in IT budgets this year. Growth in IT spending for 2022 is expected to remain above the 10-year pre-COVID-19 average, according to Morgan Stanley. We believe this is a result of the strong secular underpinnings brought on by digital transformation and businesses focusing on increasing efficiencies through technology.”
8. Texas Instruments Incorporated (NASDAQ:TXN)
Number of Hedge Fund Holders: 46
Texas Instruments Incorporated (NASDAQ:TXN) is one of the oldest American chip companies, formed in 1930 and is headquartered in Dallas, Texas. The firm is responsible for designing and selling semiconductors that are responsible for power management and signal processing in a wide variety of technology gadgets.
Texas Instruments Incorporated (NASDAQ:TXN) is one of the few semiconductor stocks out there that pays a dividend. Its current dividend yield stands at a high of 2.84% through a dividend of $1.15 per share. The company's annual cash flow has grown at a rate of 12% since 2004, and it is in the top 97th percentile of the chip industry when its return on invested capital is measured.
Oppenheimer reduced Texas Instruments Incorporated (NASDAQ:TXN)'s share price target to $200 from $220 in July 2022, as it reflected on the current chip downturn. However, the firm kept an Outperform rating for the shares. 46 out of Insider Monkey's database of 912 hedge funds for this year's first quarter had bought the company's shares.
Jean-Marie Eveillard's First Eagle Investment Management is Texas Instruments Incorporated (NASDAQ:TXN)'s largest investor. It owns 3.3 million shares that are worth $621 million.
Davis Funds mentioned Texas Instruments Incorporated (NASDAQ:TXN) in its Q4 2021 investor letter. Here is what the fund said:
7. KLA Corporation (NASDAQ:KLAC)
Number of Hedge Fund Holders: 52
KLA Corporation (NASDAQ:KLAC) is an American company that serves the upstream semiconductor supply chain. The firm is responsible for manufacturing and selling process control and yield management solutions that help chipmakers finetune their manufacturing process technologies.
KLA Corporation (NASDAQ:KLAC)'s revenue has grown at a CAGR of 12% since 2012 and the firm sells long life tools and products, with more than 80% of the tools that it has shipped in its history still being used in the industry. The firm also plans to return more than 85% of its free cash flows back to investors in the form of dividends and share repurchases over the next couple of years.
Morgan Stanley raised KLA Corporation (NASDAQ:KLAC)'s share price target to $377 from $373 in July 2022, for a rare chip share price upgrade. As its rationale, the bank outlined that the future of the industry remains slightly foggy for the time being. Insider Monkey scanned 912 hedge fund portfolios for this year's March quarter to discover that 52 had bought KLA Corporation (NASDAQ:KLAC)'s shares.
KLA Corporation (NASDAQ:KLAC)'s largest investor is Panayotis Takis Sparaggis's Alkeon Capital Management which owns 1.6 million shares worth $593 million.
In its first quarter of 2022 investor letter, Vltava Fund shared about KLA Corporation (NASDAQ:KLAC) that:
“We then used the money freed up to, among other things, open three new positions. The stock price declines during the Russian invasion brought a lot of good prices to the market. Out of all the possibilities we considered, we picked the stock of KLA Corporation (KLAC).
KLA Corporation develops leading-edge equipment and services that enable innovation throughout the electronics industry. It specialises in process management and control in semiconductor manufacturing and the related nanoelectronics industries. During manufacturing processes, products must be inspected for defects and correct critical dimensions in order to identify and eliminate possible sources of problems. As customers continue to enforce Moore’s Law, smaller chips must meet more precise specifications, which in turn increases the need for advanced inspection and diagnostic tools. This is a key step within the entire manufacturing process and one in which the company has built a very strong, and in places dominant, global position. We have been watching and waiting for an opportunity to acquire this stock for some time already, and this year’s drop in its price finally prompted us to buy.”
6. Lam Research Corporation (NASDAQ:LRCX)
Number of Hedge Fund Holders: 59
Lam Research Corporation (NASDAQ:LRCX) is another chip manufacturing equipment provider. The company is one of the few firms out there that sells equipment used in extreme ultraviolet (EUV) chip manufacturing. It is headquartered in Fremont, California, United States.
Lam Research Corporation (NASDAQ:LRCX)'s fortunes are directly tied with those of the semiconductor industry since the company is responsible for manufacturing equipment directly used in chip etching and deposition. As is the case with the research reports we shared in the introduction, Gartner also expects the chip sector to grow by 13.6% this year, spelling a positive note for the company.
Lam Research Corporation (NASDAQ:LRCX)'s share price target was lowered to $525 from $625 by B. Riley in July 2022, in the wake of the recent historic cyclical downturn in the market. 59 of the 912 hedge funds part of Insider Monkey's Q1 2022 poll had bought the company's shares.
Ken Fisher's Fisher Asset Management is Lam Research Corporation (NASDAQ:LRCX)'s largest investor. It owns 1.9 million shares that are worth $1 billion.
Vulcan Value Partners shared some thoughts about Lam Research Corporation (NASDAQ:LRCX) in its Q1 2022 investor letter. These were as follows:
“Lam Research Corp. designs and manufactures equipment used in the fabrication of semiconductors. Recent supply chain issues have negatively impacted the industry and has resulted in chip shortages. The industry is performing well, exceeding our expectations, and Lam Research’s fundamentals remain strong. The long-term secular drivers of demand and growth in the industry continue to be very powerful. Lam Research is experiencing increasing returns on capital, higher margins, and more stable results.”
Lam Research Corporation (NASDAQ:LRCX) is a semiconductor stock popular on Reddit, alongside NVIDIA Corporation (NASDAQ:NVDA), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), and Advanced Micro Devices, Inc. (NASDAQ:AMD).
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Disclosure. None. These 10 Semiconductor Stocks Are Popular On Reddit is originally published on Insider Monkey.