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Is the Worst Over for Semiconductor Stocks & ETFs?

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Semiconductor stocks had taken a beating this year, due to fears about global economic slowdown and soaring input costs. Many of them have rebounded in the past few weeks, particularly after cooler-than-expected inflation reports and better-than-feared results.

Shares of world’s largest contract chipmaker Taiwan Semiconductor (TSM - Free Report) surged after it was revealed that Warren Buffett’s Berkshire Hathaway invested more than $5 billion in the company. TSMC accounts for around 55% of the global foundry or fab market.

ASML Holding NV (ASML - Free Report) produces extreme ultraviolet lithography machines that use light to print patterns on silicon wafer at a minuscule scale. These sophisticated machines are used by the world’s leading chip manufacturers, including Taiwan Semiconductor, Intel (INTC - Free Report) , and Samsung. ASML stock surged after the company raised its financial targets recently.

NVIDIA (NVDA - Free Report) , America’s largest chip company, beat revenue expectations but its earnings fell short. However, their data center business remained strong. Its competitor AMD (AMD - Free Report) had reported results at the beginning of the month and beaten consensus estimates despite weaker PC environment as it expanded into servers.

The VanEck Vectors Semiconductor ETF (SMH - Free Report) follows a market cap weighted index of 25 US-listed semiconductor companies. TSMC, NVIDIA and ASML are its top holdings.

The iShares PHLX Semiconductor ETF (SOXX - Free Report) is a modified market cap weighted ETF. It has 30 holdings with a cap of 8% on individual securities. Broadcom (AVGO - Free Report) and Texas Instruments (TXN - Free Report) are its top holdings.

The SPDR S&P Semiconductor ETF (XSD - Free Report) is an equal weighted ETF. The Invesco PHLX Semiconductor ETF (SOXQ - Free Report) , which made its debut last year, is now the cheapest product in the space.

To learn more about these stocks and ETFs, please watch the short video above.


 

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