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The Semiconductor Stocks: Buy, Hold or Fold?

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  • (0:30) - Semiconductor Industry Overview
  • (3:40) - Is The Tech Cycle Coming To An End?
  • (9:45) - What Stocks Should You Be Watching?
  • (13:00) - Long Term Risk For Semiconductors
  • (17:00) - Why Is Nvidia Such A Power House?
  • (25:45) - Episode Roundup: MU, LRCX, AMAT, NVDA, TSM
  •             Podcast@Zacks.com

Welcome to Episode #130 of the Zacks Market Edge Podcast.

Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.

In this episode, Tracey is joined by Kevin Cook, Zacks Senior Stock Strategist and Editor of the TAZR and Healthcare Innovators newsletters, to discuss what is going on with the semiconductor stocks.

Only investors who have been on a deserted island in the last year would be unaware of the tremendous rally in the semiconductor stocks.

Along with that rally came record earnings per share.

Is This the Top of the Cycle?

But the semiconductors are a cyclical industry, which means that it will overproduce the product and eventually earnings will fall.

For the last two quarters, investors have been wondering just when the shoe will drop.

But what if this time is different?

What if this is really, as Kevin calls it, a tech super cycle?

Analysts Remain Cautious

Several of the semiconductors have already reported earnings and while fiscal 2018 is extremely bullish with some companies expected to see triple digit earnings growth, the analysts are being cautious for fiscal 2019.

Why?

The “cycle” of course.

Everyone is looking for clues. When Taiwan Semiconductor warned, that spooked investors in the entire industry.

But estimates continue to rise for other companies, including Lam Research (LRCX - Free Report) , Micron (MU - Free Report) and Applied Materials (AMAT - Free Report) .

Bullish Technical Chart?

Kevin, and most of Wall Street, have been talking about the Philly Semiconductor Index and its interesting trading pattern for several weeks.

He recently tweeted out the chart:

Is this chart flashing a green light after 2 months of weakness?

The King of Them All

But one company in the group stands out above all else: NVIDIA (NVDA - Free Report) .

Shares are up 139% over the prior year on the belief that demand for AI will not slow and that few other competitors can truly compete in the space yet.

However, Intel (INTC - Free Report) isn’t letting them walk away with that market share. Kevin discusses what it’s doing to get in the game.

Should you pay 35-40x earnings for this stock? Or is it too hot to handle?

And what happens with the entire group when the slowdown in semis becomes apparent?

Find out the answers to these questions and more on this week’s must-listen podcast.

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.

Click here for the 6 trades >>