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Should You Chase the Semiconductor Stocks in 2023?

  • (0:30) - Should You Be Jumping In On The Semiconductor Growth??

  • (4:15) - Breaking Down The Semiconductor Performance: What Is Pushing The Growth?

  • (14:30) - Tracey’s Big Takeaways: SOXX, NVDA, AVGO, TXN, AMD

  • Podcast@Zacks.com

 

Welcome to Episode #353 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.

This week, Tracey is going solo to discuss the semiconductor stocks. After a terrible 2022, the semiconductors stocks have rallied in 2023. The iShares Semiconductor ETF is up 23% year-to-date while the S&P 500 has only gained 3.6%.

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Are the Semis Sending a Bullish Signal?

On Mar 20, 2023, Carson Group’s Chief Market Strategist, Ryan Detrick, tweeted out about how the semis made a “new 52-week relative strength high” versus the S&P 500. Detrick noted in the tweet that such an event wasn’t normally consistent with a recession.

Is the semiconductor rally of 2023 signaling that there will NOT be a recession this year? Is the economy stronger than many realize?

And if not, should investors be buying the semiconductors?

5 Big Cap Semiconductor Stocks

1.      NVIDIA Corp. (NVDA)

NVIDIA is the semiconductor company on everyone’s lips in 2023 due to its focus on gaming and AI. After selling off in 2022, shares of NVIDIA have rallied 76% year-to-date.

Earnings are expected to jump 34.1% in fiscal 2024 and another 33% in fiscal 2025.

But investors won’t get NVIDIA shares cheaply on a P/E basis. It trades with a forward P/E of 57.8.

Should investors disregard valuation and own NVIDIA for its growth anyway?

2.      Broadcom (AVGO)

Broadcom is also up in 2023, gaining 13.8% year-to-date. Analysts are bullish on Broadcom, with 12 estimates up for fiscal 2023 in the last month. Earnings are expected to rise 9.9% this year.

Shares of Broadcom are also still cheap, with a forward P/E of just 15.6. Additionally, many income investors are fans, as Broadcom pays a dividend currently yielding 2.9%.

Should Broadcom be on your short list due to its attractive valuation?

3.      Texas Instruments (TXN)

Texas Instruments is the third largest position in the iShares Semiconductor ETF. Shares of Texas Instruments are also up in 2023, gaining 7.2%.

But earnings are expected to fall 19.8% this year to $7.53 from $9.39 last year. It’s not that cheap, with a forward P/E of 23.8.

Is Texas Instruments a value trap?

4.      Advanced Micro Devices, Inc. (AMD)

Advanced Micro Devices has soared 46.5% in 2023. But it’s a Zacks Rank #4 (Sell) as 14 earnings estimates have been cut in the last 2 months for 2023, including one in the last week.

Earnings are expected to fall 14% in 2023 to $3.01 from $3.50. Advanced Micro Devices is also not a cheap stock, with a forward P/E of 32.2.

Is Wall Street looking past Advance Micro Device’s falling earnings estimates for this year?

5.      QUALCOMM Inc. (QCOM)

QUALCOMM shares are also up in 2023, gaining 11.8% year-to-date. But analysts are bearish on it, as earnings are expected to fall 24.1% in fiscal 2023. The Zacks Consensus is calling for $9.51 from the $12.53 it made last year.

QUALCOMM, however, is still cheap. It has a forward P/E of just 12.8. QUALCOMM also pays a dividend, currently yielding 2.5%.

Should investors be keeping QUALCOMM on its short list?

What else do you Need to Know About the Semiconductor Stocks in 2023?  

Listen to this week’s podcast to find out.

 

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QUALCOMM Incorporated (QCOM) : Free Stock Analysis Report

Texas Instruments Incorporated (TXN) : Free Stock Analysis Report

Advanced Micro Devices, Inc. (AMD) : Free Stock Analysis Report

NVIDIA Corporation (NVDA) : Free Stock Analysis Report

Broadcom Inc. (AVGO) : Free Stock Analysis Report

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