4 Semiconductor Stocks to Watch as Sales Rebound in April
Semiconductor sales, which had skyrocketed during the pandemic, have declined sharply over the past year. However, sales seem to be rebounding now, as the latest report from the Semiconductor Industry Association (SIA) reflects a jump in semiconductor sales in April.
Predictions were that semiconductor sales would hit bottom by the end of the first quarter before making a steady recovery. The latest sales figures hint at that. Although challenges remain aplenty, demand for semiconductors is expected to be robust, fueled by the development of technologies like artificial intelligence (AI), machine learning, and the Internet of Things.
Semiconductor Sales Rebound
According to the latest report from SIA, global semiconductor sales totaled $40 billion in April, up 0.3% from March’s total of $39.8 billion. Semiconductor sales seem to be finally rebounding, as predicted earlier.
However, the recovery is expected to be slow and steady. On a year-over-year basis, semiconductor sales declined 21.6% in April.
The semiconductor industry saw sales hitting record highs during the pandemic as millions worked remotely. Surging demand for electronic goods and indoor entertainment like video games had fueled sales, while lockdown-induced halts in shipment imposed industry-wide supply-chain challenges.
Higher demand coupled with a shortage in microchip supply created turmoil in multiple end-user industries like automobiles, power, lighting and electronics. As the supply-chain crisis started getting resolved, demand slowed. This saw the sales curve moving up and down throughout 2022.
Besides, a combination of interrelated factors, including increasing prices, geopolitical tensions, and the lingering effects of the pandemic, contributed to the temporary downturn. These elements impacted consumer spending, created macroeconomic uncertainty and led to fluctuations in demand for semiconductors.
However, 2022 emerged to be the best year for the chip industry. According to SIA, global semiconductor sales jumped 3.2% to $573.5 billion in 2022 from $555.9 billion in 2021.
The industry is poised to rebound and grow in 2023. According to the latest forecast by the World Semiconductor Trade Statistics, annual global semiconductor sales are projected to decrease 10.3% in 2023 and rebound with growth of 11.9% or $576 billion in 2024.
Stocks to Watch
Given the bright prospect for the industry, it would be wise to invest in semiconductor stocks. Below are four chip stocks that investors can gain from in the near term.
NVIDIA Corporation NVDA is the worldwide leader in visual computing technologies and the 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, necessary to run deep-learning algorithms.
NVIDIA’s expected earnings growth rate for next year is 33.4%. The Zacks Consensus Estimate for current-year earnings has improved 70.5% over the past 60 days. NVDA presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
ON Semiconductor Corporation ON 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 different elements within virtually every electronic device.
ON Semiconductor’s expected earnings growth rate for next year is 10.5%. The Zacks Consensus Estimate for current-year earnings has improved 10.2% over the past 90 days. ON currently has a Zacks Rank #3 (Hold).
NXP Semiconductors NXPI provides high-performance mixed-signal and standard product solutions that leverage its RF, analog, power management, interface, security, as well as digital processing expertise. NXPI seems well-positioned to capitalize on the level 2-5 automotive market. Additionally, NXP Semiconductors is the leader in general-purpose microcontrollers and application processors in industrial and IoT markets.
NXP Semiconductors’ expected earnings growth rate for next year is 8.2%. The Zacks Consensus Estimate for current-year earnings has improved 7.7% over the past 60 days. Presently, NXPI carries a Zacks Rank #3.
Microchip Technology MCHP has been consistently benefiting from its strength in analog and microcontroller businesses. MCHP’s dominance in 8, 16, and 32-bit PIC microcontrollers remains a major driver of top-line and bookings growth. Microchip Technology has acquired notable companies like Tekron International, Microsemi and Atmel to add strength to its product offerings.
Microchip Technology’s expected earnings growth rate for next year is 3.2%. The Zacks Consensus Estimate for current-year earnings has improved 1.1% over the past 60 days. MCHP currently has a Zacks Rank #3.
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NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Microchip Technology Incorporated (MCHP) : Free Stock Analysis Report
NXP Semiconductors N.V. (NXPI) : Free Stock Analysis Report
ON Semiconductor Corporation (ON) : Free Stock Analysis Report
