10 Semiconductor Stocks to Consider for Your Portfolio
If you intend to invest in stocks, consider investing with semiconductor companies. Semiconductor companies make materials that conduct electricity more than insulators yet conduct less than a pure conductor. There are different types of semiconductors. According to Investopedia, there are four main groups of semiconductors: memory, complex SOC, commodity integrated circuit, and microprocessors. You should purchase semiconductor stocks because they contain liquid securities that encourage risk-taking, e.g., monthly market timing. Additionally, they are not affected by drastic falls since they act independently in many market phases. Now that you know what semiconductors are, it is time to identify ten of them that you should consider below.
10. Skyworks Solutions
This company manufactures semiconductors used in mobile communications systems and Radio Frequency (RF). Some of the products they manufacture include circulators, modulators, diodes, detectors, phase shifters, etc. They have continually been able to develop new products due to their investment in research. The company supplies most of its products to Apple. According to Fool, the company became their supplier due to the smartphone boom over the past decade. Besides working with a famous company, the company sought to diversify its products by purchasing a company called Silicon Labs which specializes in network infrastructure. As a result, the company has increased sales of its products consistently.
9. Teradyne, Inc.
Teradyne, Inc. is a company that enables companies to conduct quality checks on their products. They do this by testing products to ensure they work well the first time. Some of their products include wireless testing, storage testing, industrial automation, semiconductor testing, etc. Using an untested product is risky in terms of health or financial loss; hence people rely on this company for testing. The high demand for testing has steadily led to the growth of this company. According to Seeking Alpha, they reported their first quarter earnings in April 2021. Besides earning, the company’s revenues rose by 11%.
8. Nvidia
The company is generally considered the best GPU manufacturer. Since most companies buy GPUs from them, the company has been able to earn higher-than-average profit margins. With such earnings, the company has invested in research and product development and expanded revenue. Nvidia started making GPUs for high-end computer game graphics but has since ventured into artificial intelligence (AI) by making specific chips. With the increased demand for AI, this company will likely earn high wages consistently.
7. Intel
Intel develops microprocessors used in most personal computers like Dell and Apple. Besides majoring in computers, the company acquired Mobileye. Mobileye has been instrumental in developing vision technology used in Advanced Driver Assistance Systems (ADAS) and autonomous driving. Most cars rely on such technology, so this company is likely to grow due to its demand.
6. Broadcom
Broadcom develops and supplies semiconductors used in networking, the data center, and industrial markets. The company has outperformed the broad market due to people’s reliance on the 5G networks. Businesses prefer 5G networks because they can communicate within a short time without lags. Telecom companies are spending billions on upgrading their infrastructure to 5G. Since this company manufactures 5G chips, investing in this company means you will continually enjoy returns due to the high demand for 5G.
5. Qorvo
Qorvo develops technologies for wireless and wired connectivity worldwide. This company has been able to stand out due to its ties with Apple. The company supplies chips to Apple, enabling Apple to develop iPhones. Nearly every American uses smartphones. In 2021, 56% of iPhones accounted for all U.S. sales. Just like Broadcom, the company has the potential to grow since iPhones rely on 5G technology.
4. Advanced Micro Devices (AMD)
The company specializes in making semiconductors used in computer processing. Additionally, the company produces motherboard chipsets, flash memories, and graphics processors. AMD has excelled in the fields of gaming and data center. The most popular gaming console is PlayStation. This console uses AMD’s processing units. Since it is the first console people buy, this company will continue to rise due to its demand. Data centers enable you to use the internet. Many of the websites you visit mostly rely on AMD’s processors. Since nearly everyone uses the internet, buying stocks from this company is a good investment.
3. Qualcomm
Qualcomm is the leading producer of integrated GPUs, application processors, and baseband modems for mobile devices. A major reason for its growth was its ability to address instances of chip shortage. The company tackled the shortage through multi-sourcing key products from its vendors. Most companies believe growth entails making everything on their own. However, there are instances when you will have to work with other companies, including your competitors. Since the company can continually get its materials from different sources, people can trust the company to get chips whenever they want. By working with different companies, this company can incorporate different ideas to further its growth.
2. Texas Instruments Inc.
The company produces embedded chips for automotive, communication, and industrial markets. This company has mastered the art of hardly running out of chips by manufacturing them at their plants and outsourcing their chips to third-party contract chipmakers. As a result, a lot of companies rely on them for chips. In 2021, the company sold 77% of its chips. Although the COVID-19 pandemic of 2020, it steadily recovered and grew the following year. For instance, their revenues rose more than 30%.
1. Micron Technology Inc. (MU)
MU specializes in developing memory and storage solutions. Its products are used in computers, automobiles, and consumer electronics. As a result, the company has benefit from the strong demand for its products. That is because the company has been able to target different users by specializing in different fields. Another reason MU has grown is due to its attractive valuation. For instance, the company traded at eight times forward earnings, yet its competitors would offer a rate from thirteen.
Conclusion
Nearly every electrical product you use relies on chips. That means there is a high demand for chips, so it makes sense to invest in semiconductor stocks. Also, these stocks are not as volatile as other investments, so you do not need to worry about frequently losing your funds. So, if you are looking to invest, why not opt for semiconductor stocks.
