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Soaring Demand Continues to Drive Semiconductor Sales: 5 Picks
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The dream run for the semiconductor industry has continued into 2022, thanks to soaring demand following the pandemic that has resulted in a supply crunch. Although the gap between demand and supply is gradually narrowing, the crisis is far from over.
This has resulted in massive growth in sales of semiconductors over the past couple of years. Soaring demand is thus also helping semiconductor manufacturers earn more revenues. Thus, stocks like ON Semiconductor Corporation (ON - Free Report) , Micron Technology, Inc. (MU - Free Report) , NVIDIA Corporation (NVDA - Free Report) and Analog Devices (ADI - Free Report) are expected to benefit in the near term.
Semiconductor Sales Continue to Soar
According to the latest report from the Semiconductor Industry Association (SIA), global semiconductor sales jumped 32.4% year over year in February to $52.5 billion from $39.6 billion a year ago.
On a month-over-month basis, semiconductor sales rose 3.4% in February from January’s total of $50.7 billion. According to SIA, February proved to be a great month, with worldwide semiconductor sales increasing more than 20% year over year for the 11th straight month.
The report also mentioned that sales grew year over year across all regions. Sales increased 43.2% in the Americas, 41.4% in Asia/Pacific/others, 29.3% in Europe, 21.8% in China and 21.6% in Japan.
Industry on a High
Over the last few years, demand for semiconductors has skyrocketed. The COVID-19 pandemic resulted in a surge in demand for electronic goods, networking, and communication equipment as more people stayed and worked and learned from home. This drove sales of semiconductors.
More, as the Internet of Things, artificial intelligence, and virtual reality gain more prominence and prominent, the demand for microchips increases. Semiconductor technology is critical to the development of these cutting-edge technologies. As a result, demand for semiconductors is only projected to increase in the near future as the need for these services increases.
Microchip sales are also benefiting from the growing demand for 5G smartphones, with unit production more than tripling to 555 million in 2021 from 250 million in 2020.
While soaring demand for semiconductor is helping manufacturers earn more revenues, it has posed a new challenge for them as they are struggling to supply enough units. The automobile industry was severely hit in 2021 as a result of this increased demand for semiconductors, which prompted them to curtail production.
This has resulted in a serious supply crunch, compelling many to ramp up production. However, even then, the semiconductor shortage is far from over, and it is anticipated to continue for the remainder of the year. Given that demand is expected to remain strong, this will only benefit the industry.
Our Choices
The semiconductor industry is only likely to benefit in the near term, given the surging demand for semiconductors and the ongoing supply shortage. In the current market, there are four chip stocks that investors might gain from.
ON Semiconductor Corporation is a supplier of broadband and power management integrated circuits and standard semiconductors used in numerous advanced devices, ranging from high-speed fiber optic networking equipment to the precise power management functions found in portable electronics. ON’s products provide clock management and data flow management for precision computing and communications systems, and power management for distributing and monitoring the supply of power to the different elements within virtually every electronic device.
ON Semiconductor’s expected earnings growth rate for the current year is 41%. The Zacks Consensus Estimate for current-year earnings has improved 26.8% over the past 90 days. ON holds a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Micron Technology has established itself as one of the leading worldwide providers of semiconductor memory solutions. Through global brands, namely Micron, Crucial and Ballistix, MU manufactures and markets high-performance memory and storage technologies including Dynamic Random Access Memory (DRAM), NAND flash memory, NOR Flash, 3D XPoint memory and other technologies. Micron Technology’s solutions are used in leading-edge computing, consumer, networking and mobile products.
Micron Technology’s expected earnings growth rate for the current year is 57.4%. The Zacks Consensus Estimate for current-year earnings has improved 7.1% over the past 60 days. MU holds a Zacks Rank #2 (Buy).
NVIDIA Corporation is the worldwide leader in visual computing technologies and inventor of the graphic processing unit, GPU. Over the years, NVDA’s focus has evolved from PC graphics to AI-based solutions that now support high-performance computing, gaming and virtual reality platforms. NVIDIA’s GPU success can be attributed to its parallel processing capabilities supported by thousands of computing cores, which are necessary to run deep-learning algorithms.
NVIDIA’s expected earnings growth rate for the current year is 25%. The Zacks Consensus Estimate for current-year earnings has improved 7.6% over the past 60 days. NVDA carries a Zacks Rank #2.
Analog Devices is an original equipment manufacturer of semiconductor devices, specifically, analog, mixed-signal and DSP integrated circuits. ADI’s product line is composed of amplifiers and comparators; analog to digital converters; digital to analog converters; video encoders and decoders; embedded processing products and DSPs; MEMS and temperature sensors; RF/IF components and converters; power and thermal management ICs, audio/video converters, amplifiers, CODECs, filters and processors. Analog Devices has manufacturing facilities in the United States, Ireland, and Southeast Asia.
Analog Devices’ expected earnings growth rate for the current year is 28.8%. The Zacks Consensus Estimate for current-year earnings has improved 10.5% over the past 60 days. ADI carries a Zacks Rank #2.
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Soaring Demand Continues to Drive Semiconductor Sales: 5 Picks
The dream run for the semiconductor industry has continued into 2022, thanks to soaring demand following the pandemic that has resulted in a supply crunch. Although the gap between demand and supply is gradually narrowing, the crisis is far from over.
This has resulted in massive growth in sales of semiconductors over the past couple of years. Soaring demand is thus also helping semiconductor manufacturers earn more revenues. Thus, stocks like ON Semiconductor Corporation (ON - Free Report) , Micron Technology, Inc. (MU - Free Report) , NVIDIA Corporation (NVDA - Free Report) and Analog Devices (ADI - Free Report) are expected to benefit in the near term.
Semiconductor Sales Continue to Soar
According to the latest report from the Semiconductor Industry Association (SIA), global semiconductor sales jumped 32.4% year over year in February to $52.5 billion from $39.6 billion a year ago.
On a month-over-month basis, semiconductor sales rose 3.4% in February from January’s total of $50.7 billion. According to SIA, February proved to be a great month, with worldwide semiconductor sales increasing more than 20% year over year for the 11th straight month.
The report also mentioned that sales grew year over year across all regions. Sales increased 43.2% in the Americas, 41.4% in Asia/Pacific/others, 29.3% in Europe, 21.8% in China and 21.6% in Japan.
Industry on a High
Over the last few years, demand for semiconductors has skyrocketed. The COVID-19 pandemic resulted in a surge in demand for electronic goods, networking, and communication equipment as more people stayed and worked and learned from home. This drove sales of semiconductors.
More, as the Internet of Things, artificial intelligence, and virtual reality gain more prominence and prominent, the demand for microchips increases. Semiconductor technology is critical to the development of these cutting-edge technologies. As a result, demand for semiconductors is only projected to increase in the near future as the need for these services increases.
Microchip sales are also benefiting from the growing demand for 5G smartphones, with unit production more than tripling to 555 million in 2021 from 250 million in 2020.
While soaring demand for semiconductor is helping manufacturers earn more revenues, it has posed a new challenge for them as they are struggling to supply enough units. The automobile industry was severely hit in 2021 as a result of this increased demand for semiconductors, which prompted them to curtail production.
This has resulted in a serious supply crunch, compelling many to ramp up production. However, even then, the semiconductor shortage is far from over, and it is anticipated to continue for the remainder of the year. Given that demand is expected to remain strong, this will only benefit the industry.
Our Choices
The semiconductor industry is only likely to benefit in the near term, given the surging demand for semiconductors and the ongoing supply shortage. In the current market, there are four chip stocks that investors might gain from.
ON Semiconductor Corporation is a supplier of broadband and power management integrated circuits and standard semiconductors used in numerous advanced devices, ranging from high-speed fiber optic networking equipment to the precise power management functions found in portable electronics. ON’s products provide clock management and data flow management for precision computing and communications systems, and power management for distributing and monitoring the supply of power to the different elements within virtually every electronic device.
ON Semiconductor’s expected earnings growth rate for the current year is 41%. The Zacks Consensus Estimate for current-year earnings has improved 26.8% over the past 90 days. ON holds a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Micron Technology has established itself as one of the leading worldwide providers of semiconductor memory solutions. Through global brands, namely Micron, Crucial and Ballistix, MU manufactures and markets high-performance memory and storage technologies including Dynamic Random Access Memory (DRAM), NAND flash memory, NOR Flash, 3D XPoint memory and other technologies. Micron Technology’s solutions are used in leading-edge computing, consumer, networking and mobile products.
Micron Technology’s expected earnings growth rate for the current year is 57.4%. The Zacks Consensus Estimate for current-year earnings has improved 7.1% over the past 60 days. MU holds a Zacks Rank #2 (Buy).
NVIDIA Corporation is the worldwide leader in visual computing technologies and inventor of the graphic processing unit, GPU. Over the years, NVDA’s focus has evolved from PC graphics to AI-based solutions that now support high-performance computing, gaming and virtual reality platforms. NVIDIA’s GPU success can be attributed to its parallel processing capabilities supported by thousands of computing cores, which are necessary to run deep-learning algorithms.
NVIDIA’s expected earnings growth rate for the current year is 25%. The Zacks Consensus Estimate for current-year earnings has improved 7.6% over the past 60 days. NVDA carries a Zacks Rank #2.
Analog Devices is an original equipment manufacturer of semiconductor devices, specifically, analog, mixed-signal and DSP integrated circuits. ADI’s product line is composed of amplifiers and comparators; analog to digital converters; digital to analog converters; video encoders and decoders; embedded processing products and DSPs; MEMS and temperature sensors; RF/IF components and converters; power and thermal management ICs, audio/video converters, amplifiers, CODECs, filters and processors. Analog Devices has manufacturing facilities in the United States, Ireland, and Southeast Asia.
Analog Devices’ expected earnings growth rate for the current year is 28.8%. The Zacks Consensus Estimate for current-year earnings has improved 10.5% over the past 60 days. ADI carries a Zacks Rank #2.