Surge Continues: These 13 Semiconductor Stocks Up 81% In 2023; Up 10% MTD

By Lorimer Wilson munKNEE.com
Tuesday, January 30, 2024 5:30 AM EST

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Introduction

Demand for next-generation graphics processing units (GPUs) - enables many pieces of data to be processed simultaneously making them useful for machine learning, video editing, and gaming applications - and central processing units (CPUs) - a complex set of electronic circuitry that runs the machine's operating system and apps - soared in 2023 as companies sought to power their new AI applications. As a result, the price of AI chip stocks surged resulting in the 30 stocks in the iShares Semiconductor ETF (SOXX} going UP 64%, on average, by year end. That's significant, but there is no need to think you have missed out on the boom because many analysts think there is an excellent chance that the chip boom will continue in 2024 and, if the 5% uptick in the ETF month-to-date is any indication, that could well be the case. That being said, this article concludes with a cautionary tale that should be digested before any investments in the sector are initiated.
 

A Short List of Chip Stocks to Watch

I have analyzed all 30 stocks as to their PEG (price-to-earnings growth) ratios and the consensus ratings and price targets of the Wall Street analysts covering the stocks and have identified 13 (see below) stocks in the sector that continue to surge ( UP 3.0% last week; UP 10.0% month-to-date, on average) and have Strong Buy or Buy ratings from the analysts. They are listed as to their performances MTD, in descending order, along with the latest news, commentary, and/or analysis on each, where applicable.

  1. Nvidia (NVDA): UP 23.2% MTD
  2. Advanced Micro Devices (AMD): UP 20.2% MTD
  3. ASML Holding (ASML): UP 14.6% MTD
  4. Advantest Corp. (ATEYY): UP 14.2% MTD
  5. Taiwan Semiconductor (TSM): UP 12.8% MTD
  6. Marvell Technology (MRVL): UP 12.8% MTD
  7. Broadcom (AVGO): UP 7.9% MTD
  8. Lam Research (LRCX): UP 7.1% MTD
  9. MKS Instruments (MKSI): UP 7.1% MTD
  10. Rambus (RMBS): UP 4.4% MTD
  11. Qualcomm (QCOM): UP 4.2% MTD
  12. Micron Technology (MU): UP 3.2% MTD
  13. Applied Materials (AMAT): UP 3.0% MTD

It should be noted that the remaining 17 constituents in SOXX were DOWN 2.7% last week, on average, and are DOWN 3.7% MTD, on average. 
 

A Word of Caution

Luke Lango, however, points out (see here) that even the biggest of bull markets don’t go up in straight lines cautioning "Don’t be surprised if, in the short term, these stocks retreat 10% or even 20%-plus. They’ve run too far, too fast on expectations that are just too much, too soon." That being said, he is "confident that long-term, AI chip stocks are just fine...[and] will rally strongly throughout the rest of 2024 – and likely the rest of the decade, too so, if you’re a long-term investor, these are winning stocks you want in your portfolio." 

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Disclosure: None

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