U.S. Markets closed
  • S&P Futures

    4,587.25
    +21.00 (+0.46%)
     
  • Dow Futures

    34,532.00
    +75.00 (+0.22%)
     
  • Nasdaq Futures

    16,244.75
    +94.25 (+0.58%)
     
  • Russell 2000 Futures

    2,217.40
    +20.10 (+0.91%)
     
  • Gold

    1,772.30
    -1.30 (-0.07%)
     
  • Silver

    22.61
    -0.15 (-0.68%)
     
  • EUR/USD

    1.1328
    -0.0012 (-0.1019%)
     
  • 10-Yr Bond

    1.4430
    -0.1610 (-10.04%)
     
  • Vix

    27.19
    +10.08 (+58.91%)
     
  • GBP/USD

    1.3300
    -0.0002 (-0.0133%)
     
  • USD/JPY

    113.3970
    +0.2170 (+0.1917%)
     
  • BTC-USD

    57,038.55
    -319.45 (-0.56%)
     
  • CMC Crypto 200

    1,463.85
    -4.08 (-0.28%)
     
  • FTSE 100

    7,059.45
    -231.75 (-3.18%)
     
  • Nikkei 225

    27,897.47
    +75.71 (+0.27%)
     

5 Solid Stocks to Buy on a Thriving Semiconductor Industry

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·5 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Several industries have been hit hard owing to the global semiconductor shortage. Even microchip makers are struggling to meet the global demand. However, that has been working miracles for the semiconductor industry, with sales surging every month.

According to the Semiconductor Industry Association (SIA), global microchip sales rose both month over month and year over year in August. And with no signs of the shortage easing, sales are likely to be high in the coming months.

Semiconductor Sales Rise in August

The SIA said on Oct 5 that global semiconductor sales reached $47.2 billion in August, jumping 29.7% year over year from $36.4 billion. Moreover, sales rose 3.3% from July’s total of $45.7 billion.

According to SIA, chip shipments have been on the rise and hit record highs in recent months as the industry continued to ramp up production owing to a huge demand for microchips across major industries, including auto, computers and electronic goods.

Sales grew across all regions on a year-over-year basis in August, with sales jumping 33.5% in Europe, 30.8% in China, 28.2% in the Asia Pacific, 30.6% in the Americas and 23.8% in Japan. Month over month,sales increased 4.9% in Americas, 3.4% in China, 3.3% in Japan, 2.6% in Asia Pacific/All Other,and 1.5% in Europe.

Semiconductor Industry Booming

After an outstanding 2020, the dream run for the semiconductor industry has continued this year. While the pandemic took its toll on several industries, the semiconductor industry continued to thrive. As more people worked and learned from home, they invested heavily in electronic items, computers and accessories. This gave a thrust to the demand for microchips, thus helping drive sales.

However, the problem now seems to be a different one. While microchip has been soaring on higher demand, industries are now facing supply shortages that are affecting them. The auto industry and computer makers seem to be the biggest sufferers of this shortage.

According to IHS Markit, microchip shortage will see a cut in production of vehicles by 700,000 in the third quarter, as carmakers continue to halt production temporarily. According to Bloomberg, this could result in a loss of $61 billion in revenues by the end of this year.

Industry executives now believe that this supply crunch could continue into 2022 and even 2023. However, this will only benefit the semiconductor industry. Semiconductor sales came in at $133.6 billion in the second quarter, reflecting an increase of 29.2% year over year and a jump of 8.3% from the first quarter of 2021.

Our Choices

Given the rising demand for semiconductors and continuing supply crunch, the semiconductor industry is only likely to benefit in the near term. Below are five chip stocks that investors can gain from in the current scenario.

Texas Instruments Incorporated TXN is an original equipment manufacturer of analog, mixed-signal and digital-signal processing integrated circuits. The company recently announced that it wouldbe introducing a new TI-84 graphing calculator that will support the programing language Python.

The company’s expected earnings growth rate for the current year is 31.7%. Its shares advanced 2.1% in the past 30 days. Texas Instruments carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

NVIDIA Corporation NVDA is the worldwide leader in visual computing technologies and inventor of the graphic processing unit, GPU. Over the years, the company’s focus has evolved from PC graphics to artificial intelligence-based solutions that now support high-performance computing, gaming and virtual reality platforms.

The company’s expected earnings growth rate for the current year is 68%. The Zacks Consensus Estimate for current-year earnings improved 5.8% over the past 60 days. Nvidia has a Zacks Rank #2.

Analog Devices, Inc. ADI is an original equipment manufacturer of semiconductor devices, specifically analog, mixed-signal and digital signal processing integrated circuits.

The company’s expected earnings growth rate for the next year is 30.6%. The Zacks Consensus Estimate for current-year earnings improved 2.2% over the past 60 days. Analog Devices carries a Zacks Rank #2.

Semtech Corporation’s SMTC devices are used in a variety of applications including computer, communications, industrial, military-aerospace and automotive. The company also provides a limited amount of wafer foundry services to other electronic component manufacturers.

The company’s expected earnings growth rate for the current year is 45.7%. The Zacks Consensus Estimate for current-year earnings has improved 5.8% over the past 60 days. Semtech has a Zacks Rank #1.

Vishay Intertechnology, Inc. VSH is a global manufacturer and supplier of semiconductors and passive components. Its products include metal oxide semiconductor field-effect transistors, Diodes and Optoelectronic Components.

The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 8.3% over the past 60 days. Vishay Intertechnology has a Zacks Rank #2.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Analog Devices, Inc. (ADI) : Free Stock Analysis Report
 
Texas Instruments Incorporated (TXN) : Free Stock Analysis Report
 
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
 
Semtech Corporation (SMTC) : Free Stock Analysis Report
 
Vishay Intertechnology, Inc. (VSH) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research