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These 5 Chipmakers Are Making Most of the Coronavirus Crisis
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The coronavirus pandemic has been causing bloodbath on all fronts, rattling stock markets and the global economy. However, amid this market mayhem, chipmakers’ performances are hinting at the companies’ resilience to the crippling economic impact of the pandemic compared with other industries.
For instance, Micron (MU - Free Report) reported stronger-than-expected results for second-quarter fiscal 2020 on Mar 25. The company’s upbeat Q3 outlook further boosts confidence over chipmakers’ growth prospects this year.
Data-Center, PC Demand Fueling Chip Sales
Micron stated that the industry is witnessing a different demand scenario for its memory chips. The company noted that the coronavirus-led global lockdown is thwarting demand for smartphone, automotive and consumer electronics.
Nonetheless, the lockdown situation has spurred significant chip demand from PC manufacturers and data-center operators, which mainly drove Micron’s quarterly results. In its earnings conference call, the company noted that the global quarantine situation is fueling demand for PCs and notebooks, as more and more workers and students work and learn from home.
The work-and-learn-from home necessity is also stoking demand for cloud storage. Furthermore, the lockdown has increased the usage of online and e-commerce services globally. Therefore, data-center operators are enhancing their capacities to accommodate the demand spike for cloud services.
The world’s largest memory chip maker, Samsung, also stated similar views last week. The company anticipates that stellar demand from data centers and PC manufacturers will fuel a recovery in memory chip markets this year.
The latest demand trend will, undoubtedly, benefit other players in the industry too, including graphics or processor chip makers. Additionally, the companies, which provide design and other components for chip making, are expected to benefit from this trend.
Long-Term Prospects Look Promising
Semiconductors are the backbone of the current-day technology-driven economy. The ongoing digitization across industries, adoption of cloud computing, as well as integration of AI and machine learnings are likely to boost demand for semiconductors.
The accelerated deployment of 5G technology — the next-generation wireless revolution — is likely to propel further growth. This apart, blockchain, IoT, autonomous vehicles, AR/VR and wearables are other growth prospects.
Cheap Semiconductor Stocks Now Attractive Buys
Considering growth prospects of the chip makers, it makes sense to invest for long-term gains. Furthermore, the recent sell-off significantly lowered the valuations of semiconductor stocks, making those even more attractive for investments.
The memory chipmaker — Micron — currently carries a Zacks Rank #3 (Hold) and the stock is down nearly 27% from its 52-week high.
Apart from Micron, there are much more attractive bets in the semiconductor industry. Here, we have taken the help of the Zacks Stock Screener to shortlist four stocks that are incredible for investments. These stocks carry a Zacks Rank #1 (Strong Buy) or #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Also, the stocks have a Growth Score of A or B. Per the Zacks’ proprietary methodology, stocks with such a favorable combinations offer solid investment opportunities.
Our Picks
Synaptics (SYNA - Free Report) is well poised to capitalize on its market-leading position for both touchpads and secure fingerprint sensors amid upbeat trends in PC shipments. New design wins across all OEM leaders, including Dell, HP and Lenovo, deserve a special mention.
Further, incremental adoption of this Zacks #1 Ranked company’s edge SoCs, integrated with AI and embedded neural networks capabilities for smart video and audio devices, is anticipated to favor its financial performance in the days ahead.
The stock has a Growth Score of B. Shares of the company are currently trading 30% lower than the 52-week high.
NVIDIA (NVDA - Free Report) is a global leader in providing high-performance graphic processing unit or GPU for PCs, notebooks, gaming consoles and data centers. The sudemand surge for PCs and cloud-based services will benefit NVIDIA.
In addition, this Zacks Rank #2 company’s GPU used for medical research is likely to get boost owing to the coronavirus outbreak. NVIDIA’s Parabricks tool will be very useful for researchers who are working to combat the current crisis. Through this GPU-accelerated genome analysis toolkit, researchers can accomplish analysis process in just few hours, which previously took many days.
The stock, which has a Growth Score of A, currently trades approximately 19% lower than it 52-week high.
Advanced Micro Devices (AMD - Free Report) is benefiting from robust adoption of Ryzen, Radeon and the latest second-gen EPYC processors. Further, accelerated adoption of AMD’s products in the PC, gaming and data center industries is a key catalyst.
This Zacks Rank #2 stock is also well poised to gain from strength in GPU ASPs, primarily driven by higher data-center GPU sales. Also, the growing clout of GPUs, aided by increasing adoption of AI techniques and ML tools in industries like gaming, automotive and blockchain, holds promise.
The stock has a Growth Score of A. Shares of the chipmaker are currently trading 20% lower than the 52-week high.
FormFactor (FORM - Free Report) is likely to continue benefiting from solid demand for both Foundry & Logic probe cards. Growing probe-card demand, customer node transitions and new design releases are major positives for this Zacks Rank #2 company. Further, its increasing focus on Mobile SoC and Mobile DRAM probe-card segments is another key growth driver.
The stock, which has a Growth Score of A, currently trades roughly 26% lower than it 52-week high.
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
These 5 Chipmakers Are Making Most of the Coronavirus Crisis
The coronavirus pandemic has been causing bloodbath on all fronts, rattling stock markets and the global economy. However, amid this market mayhem, chipmakers’ performances are hinting at the companies’ resilience to the crippling economic impact of the pandemic compared with other industries.
For instance, Micron (MU - Free Report) reported stronger-than-expected results for second-quarter fiscal 2020 on Mar 25. The company’s upbeat Q3 outlook further boosts confidence over chipmakers’ growth prospects this year.
Data-Center, PC Demand Fueling Chip Sales
Micron stated that the industry is witnessing a different demand scenario for its memory chips. The company noted that the coronavirus-led global lockdown is thwarting demand for smartphone, automotive and consumer electronics.
Nonetheless, the lockdown situation has spurred significant chip demand from PC manufacturers and data-center operators, which mainly drove Micron’s quarterly results. In its earnings conference call, the company noted that the global quarantine situation is fueling demand for PCs and notebooks, as more and more workers and students work and learn from home.
The work-and-learn-from home necessity is also stoking demand for cloud storage. Furthermore, the lockdown has increased the usage of online and e-commerce services globally. Therefore, data-center operators are enhancing their capacities to accommodate the demand spike for cloud services.
The world’s largest memory chip maker, Samsung, also stated similar views last week. The company anticipates that stellar demand from data centers and PC manufacturers will fuel a recovery in memory chip markets this year.
The latest demand trend will, undoubtedly, benefit other players in the industry too, including graphics or processor chip makers. Additionally, the companies, which provide design and other components for chip making, are expected to benefit from this trend.
Long-Term Prospects Look Promising
Semiconductors are the backbone of the current-day technology-driven economy. The ongoing digitization across industries, adoption of cloud computing, as well as integration of AI and machine learnings are likely to boost demand for semiconductors.
The accelerated deployment of 5G technology — the next-generation wireless revolution — is likely to propel further growth. This apart, blockchain, IoT, autonomous vehicles, AR/VR and wearables are other growth prospects.
Cheap Semiconductor Stocks Now Attractive Buys
Considering growth prospects of the chip makers, it makes sense to invest for long-term gains. Furthermore, the recent sell-off significantly lowered the valuations of semiconductor stocks, making those even more attractive for investments.
The memory chipmaker — Micron — currently carries a Zacks Rank #3 (Hold) and the stock is down nearly 27% from its 52-week high.
Apart from Micron, there are much more attractive bets in the semiconductor industry. Here, we have taken the help of the Zacks Stock Screener to shortlist four stocks that are incredible for investments. These stocks carry a Zacks Rank #1 (Strong Buy) or #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Also, the stocks have a Growth Score of A or B. Per the Zacks’ proprietary methodology, stocks with such a favorable combinations offer solid investment opportunities.
Our Picks
Synaptics (SYNA - Free Report) is well poised to capitalize on its market-leading position for both touchpads and secure fingerprint sensors amid upbeat trends in PC shipments. New design wins across all OEM leaders, including Dell, HP and Lenovo, deserve a special mention.
Further, incremental adoption of this Zacks #1 Ranked company’s edge SoCs, integrated with AI and embedded neural networks capabilities for smart video and audio devices, is anticipated to favor its financial performance in the days ahead.
The stock has a Growth Score of B. Shares of the company are currently trading 30% lower than the 52-week high.
Synaptics Incorporated Price
Synaptics Incorporated price | Synaptics Incorporated Quote
NVIDIA (NVDA - Free Report) is a global leader in providing high-performance graphic processing unit or GPU for PCs, notebooks, gaming consoles and data centers. The sudemand surge for PCs and cloud-based services will benefit NVIDIA.
In addition, this Zacks Rank #2 company’s GPU used for medical research is likely to get boost owing to the coronavirus outbreak. NVIDIA’s Parabricks tool will be very useful for researchers who are working to combat the current crisis. Through this GPU-accelerated genome analysis toolkit, researchers can accomplish analysis process in just few hours, which previously took many days.
The stock, which has a Growth Score of A, currently trades approximately 19% lower than it 52-week high.
NVIDIA Corporation Price
NVIDIA Corporation price | NVIDIA Corporation Quote
Advanced Micro Devices (AMD - Free Report) is benefiting from robust adoption of Ryzen, Radeon and the latest second-gen EPYC processors. Further, accelerated adoption of AMD’s products in the PC, gaming and data center industries is a key catalyst.
This Zacks Rank #2 stock is also well poised to gain from strength in GPU ASPs, primarily driven by higher data-center GPU sales. Also, the growing clout of GPUs, aided by increasing adoption of AI techniques and ML tools in industries like gaming, automotive and blockchain, holds promise.
The stock has a Growth Score of A. Shares of the chipmaker are currently trading 20% lower than the 52-week high.
Advanced Micro Devices, Inc. Price
Advanced Micro Devices, Inc. price | Advanced Micro Devices, Inc. Quote
FormFactor (FORM - Free Report) is likely to continue benefiting from solid demand for both Foundry & Logic probe cards. Growing probe-card demand, customer node transitions and new design releases are major positives for this Zacks Rank #2 company. Further, its increasing focus on Mobile SoC and Mobile DRAM probe-card segments is another key growth driver.
The stock, which has a Growth Score of A, currently trades roughly 26% lower than it 52-week high.
FormFactor, Inc. Price
FormFactor, Inc. price | FormFactor, Inc. Quote
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>