Best Semiconductor Stocks: 7 Picks To Buy for 2023
Semiconductor stocks are in an interesting place right now. While most of them were down last year — just like almost everything else — they’ve begun to recover in 2023.
Here’s a look at seven semiconductor stocks to consider for your portfolio.
See: 3 Things You Must Do When Your Savings Reach $50,000
What Are the Best Semiconductor Stocks To Buy?
Last year’s CHIPS and Science Act is intended to stimulate semiconductor research, development and production in the U.S. The country currently produces only about 10% of the world’s semiconductors, but this law aims to increase that number and reduce reliance on chips imported from Asia. The bill provides $500 million for semiconductor supply chain activities and international information communications technology security, $13.2 billion for research and development and workforce development, and $39 billion in manufacturing incentives, as noted in a fact sheet from the White House.
This bill, along with the pandemic-induced supply backlog that’s still being worked through, could represent a significant opportunity for semiconductor stocks. If you’re looking for the best semiconductor stock to buy, here are some to watch:
Micron Technology Inc.
GlobalFoundries Inc.
Broadcom Inc.
Texas Instruments Inc.
Advanced Micro Devices Inc.
Intel Corp.
Qualcomm Inc.
Micron Technology Inc.
Micron Technology Inc. (MU) has been producing memory and storage solutions for over 40 years. The company recently broke ground on a $15 billion manufacturing fab in Idaho, positioning it well to take advantage of the benefits provided by the CHIPS Act.
Micron is hovering between its 52-week low and high at $60.85 as of Feb. 1. This is up 21.75% from the beginning of the year, when it was trading at just over $50. According to Yahoo Finance, 31 analysts following Micron in February give it an average recommendation rating of 2.2. Eight rate it a strong buy, 20 rate it a buy and three recommend holding. The average 12-month price target is $64.17.
GlobalFoundries Inc.
GlobalFoundries Inc. (GFS) provides semiconductors for smart mobile devices, personal computers, automotive applications, communications and data infrastructure, and home and industrial IoT, or Internet of Things. At the end of 2021, GlobalFoundries reached an agreement with AMD to provide AMD with about $2.1 billion of silicon wafers through 2025, Reuters reported.
GlobalFoundries has grown 11.95% year to date, from $51.70 at the beginning of the year to $60.33 on Feb. 1. The analysts are pretty bullish on this stock; out of 16 who followed it in January, five rated it a strong buy, and eight rated it a buy. Two suggested holding and the other said it was underperforming. It’s expected to reach a price of $68.93 in 12 months, per average analyst estimates.
Broadcom Inc.
Broadcom (AVGO) designs and supplies semiconductor and infrastructure software solutions to data center, software, wireless, broadband, networking and industrial markets. Last May, Broadcom announced it would acquire enterprise software company VMware (VMW) for $61 billion in cash and stock. After the acquisition closes, which is expected to happen in Broadcom’s fiscal year 2023, the Broadcom Software Group will be known as VMware.
Broadcom closed on Jan. 31 at $585.01, up from $553.48 at the beginning of the year. But the stock has a one-year target estimate of $655.64. Its forward dividend is $18.40, yielding 3.16%. Analysts are behind it, with 10 out of 29 rating it a strong buy, 17 rating it a buy and just two calling it a hold.
Texas Instruments Inc.
Texas Instruments (TXN) is a long-time tech titan, having been founded in 1930. The company designs and manufactures analog and embedded semiconductors. Its customers include companies in the personal electronics, automotive, industrial and communications sectors.
TXN’s forward dividend is $4.96, yielding 2.83%. While most analysts — 17 out of 32 — recommend holding Texas Instruments, six rate it a strong buy and eight rate it a buy. One considers the stock to be underperforming. The average 12-month price target is $182.66.
Advanced Micro Devices Inc.
Advanced Micro Devices (AMD) develops technology for computing, graphics and visualization for individuals, businesses and scientific research institutions worldwide. AMD provides high-end processors for gaming computers, graphics-intensive applications and technical computing.
AMD is up nearly 27% this year, starting the year at $64.02 and trading at $81.02 midday on Feb. 1. Most analysts (15 out of 31) recommend holding AMD. Four rate it as underperforming and one recommends selling. But five rate it a strong buy and six rate it a buy. The average 12-month price target is $91.46.
Intel Corp.
For 50 years, Intel (INTC) has been powering the computers that have become essential to our daily lives. From processors to connectivity to memory and storage, Intel has been at the forefront. It’s widely considered the leading U.S. semiconductor manufacturer. The company is now moving from a PC-centric business to a data-centric business in the hope of staying at the top of the heap.
Like other big semiconductor companies, Intel took a hit last year — so much so that CEO Patrick Gelsinger is taking a pay cut while the company gets its spending under control. The belt-tightening seems to have impressed analysts. Whereas just six out of 45 who watch the stock recommended it as a buy or strong buy in January, 23 give it that rating in February. The 12-month average price target is $28.49.
Qualcomm Inc.
Qualcomm Inc. (QCOM) bills itself as “the world’s leading wireless tech innovator,” and it has capitalized on the move toward mobile, the Internet of Things and artificial intelligence.
Qualcomm weathered last year’s storm and is up about 25% so far this year. Analysts like it, and of the 23 following it in February, 10 rate it a buy or strong buy and 13 rate it a hold. The 12-month average price target is $147.28.
What Is the Best Semiconductor ETF?
If you can’t decide which semiconductor stock to buy, consider an exchange-traded fund that tracks the returns of the semiconductor sector. Among the largest ones is the iShares Semiconductor ETF (SOXX) with $6.84 billion in net assets. It seeks to match the performance of the ICE Semiconductor Index, before fees and expenses. Because it’s passively managed, it’s an inexpensive fund and may provide some protection from volatility compared to buying a single stock.
Is It Good To Invest In Semiconductor Stocks?
The semiconductor industry, like most of the technology sector, has been hit hard in this downturn. Conventional wisdom says that means it is due for a rally, but the timing is anyone’s guess. The CHIPS Act should provide a much-needed boost to the sector, but its effects will take some time to be felt. The overall outlook is likely positive, however, as semiconductors have become integrated into almost everything.
Daria Uhlig contributed to the reporting for this article.
Data was compiled on Feb. 1, 2023, and is subject to change. Information on analyst ratings was sourced from Yahoo Finance.
This article originally appeared on GOBankingRates.com: Best Semiconductor Stocks: 7 Picks To Buy for 2023
