Semiconductor Stocks and ETFs Shine: Opportunities and Prospects
Driven by the ChatGPT craze, semiconductor chip companies $Advanced Micro Devices(AMD.US$ ， $NVIDIA(NVDA.US$ It surged amid mixed earnings in the 422nd quarter.
How will this trend continue? Which stocks or ETFs are you interested in?
1. Semiconductor stocks and ETFs shine
Since ChatGPT is a part of generating artificial intelligence, $NVIDIA(NVDA.US$ Stocks known as the first “artificial intelligence chip” also rose accordingly. As of February 14, Nvidia's latest stock price had reached $230.49, up 57.18% from $143 on January 3, 2023. NVDA shares received a strong buying consensus rating based on 22 buys and 5 holding ratings.
Since ChatGPT is a part of generating artificial intelligence, $NVIDIA(NVDA.US$ Stocks known as the first “artificial intelligence chip” also rose accordingly. As of February 14, Nvidia's latest stock price had reached $230.49, up 57.18% from $143 on January 3, 2023. NVDA shares received a strong buying consensus rating based on 22 buys and 5 holding ratings.
$NVIDIA(NVDA.US$ Founder and CEO Hwang In-hoon even saw ChatGPT as “the iPhone moment in the field of artificial intelligence” during a speech and called it “one of the greatest technologies in computing history.”
from Yahoo
In addition, the demand for high-performance memory chips for emerging AI products such as ChatGPT has also boosted shipments from related manufacturers.
According to the Korea Economic Daily, orders received due to ChatGPT $Samsung Electronics Co., Ltd.(SSNLF.US$ Samsung Electronics Co., Ltd. (and $SK Hynix (HXSCL)) $ have made significant increases in high-bandwidth memory (HBM).
From an institutional perspective, the application of ChatGPT as an artificial intelligence-generated content (AIGC) will drive the overall needs of the chip industry.
Some other semiconductor stocks to watch out for: $Broadcom(AVGO.US$ (7.2% since early 2023), $Marvell Technology(MRVL.US$ (27.6% since the beginning of 2023), $ON Semiconductor(ON.US$ (39.3% since early 2023).
Furthermore, semiconductor ETFs $PHLX Semiconductor Index(.SOX.US$ ， $VanEck Semiconductor ETF(SMH.US$ ， $Direxion Daily Semiconductor Bull 3x Shares ETF(SOXL.US$ ， $STMicroelectronics(STM.US$ ， $iShares Semiconductor ETF(SOXX.US$ ， $INVESCO PHLX SEMICONDUCTOR ETF(SOXQ.US$ ， $Invesco Dynamic Semiconductors Etf(PSI.US$ ， $First Trust Exchange-Traded Fund VI First Trust Nasdaq Semiconductor ETF(FTXL.US$ See a decent YTD for 2023.
2. Will the semiconductor industry continue to rise?
Holds $Philadelphia Semiconductor Index (SOX) $ for analysis. The index started strongly in 2023, rising about 20% year to date, and rebounded to a low of more than two years in October. Has the index actually bottomed out?
Holds $Philadelphia Semiconductor Index (SOX) $ for analysis. The index started strongly in 2023, rising about 20% year to date, and rebounded to a low of more than two years in October. Has the index actually bottomed out?
Dan Morgan (Dan Morgan), senior portfolio manager at Synovus Traust in Atlanta, said the industry has experienced boom and bust cycles over the past 25 years, and huge differences between supply and demand have caused the industry to fluctuate greatly in sales and profits.
As chips are widely used in many products, chips usually lead the technology industry out of their trough and will be one of the first industries to show “green shoots”. This indicates an imminent recovery, but “there is little sign of a rebound at this point,” and the semiconductor industry's revenue is expected to decline in 2023.
Morgan Stanley said that if you think the economy is about to fall into a deep recession or hard landing, then you can expect the economy to contract further, but if you think that the Fed's austerity cycle is about to end and there may be a soft landing or slight recession, then the current valuation is not excessive.
3. Semiconductor industry sales data and latest data outlook
Source: Despite short-term cyclical downturn, the long-term outlook for the global semiconductor market is strong [Singapore Airlines]
3. Semiconductor industry sales data and latest data outlook
Source: Despite short-term cyclical downturn, the long-term outlook for the global semiconductor market is strong [Singapore Airlines]
According to global semiconductor sales data released last week, the industry experienced significant ups and downs in 2022. Although chip sales reached their highest annual total ever in 2022, a slowdown in the second half of the year significantly limited growth.
An in-depth study of year-end data reveals how this pattern is consistent with the semiconductor industry's predictable cycle.
In the current cycle, the semiconductor industry experienced a period of huge growth after a brief downturn at the beginning of the pandemic in early 2020, and is now on a significant downward trend starting in the second half of 2022.
The long-term downturn includes rising inflation, geopolitical turmoil, and the lingering effects of the pandemic. These factors have contributed to macroeconomic uncertainty, reduced consumer spending, and fluctuations in semiconductor demand.
Looking at long-term trends over the past 20 years from the perspective of short-term demand fluctuations, the semiconductor industry has shown continued growth. Annual sales increased 313% from US$139 billion in 2001 to US$573.5 billion in 2022. The unit sales volume of semiconductors increased by 290% over the same period, reflecting the growth in demand for semiconductors across the economy.
In fact, a 2020 study by SIA and Boston Consulting Group found that global demand for semiconductor manufacturing capacity is expected to grow 56% by 2030. As this long-term trend continues over the next few years, and demand for chips rises, semiconductor companies will need to invest more in research, design, and manufacturing.
Chips are the key to emerging technologies such as artificial intelligence, the Internet of Things, and 6G. They are critical to medical breakthroughs and medical device innovation. For example, the automotive industry is estimated to account for 20% of chip demand, and the wireless communications industry is expected to drive 25% growth by 2030. Strong growth drivers in these industries will drive demand in the chip industry over the next decade.
Chips are the key to emerging technologies such as artificial intelligence, the Internet of Things, and 6G. They are critical to medical breakthroughs and medical device innovation. For example, the automotive industry is estimated to account for 20% of chip demand, and the wireless communications industry is expected to drive 25% growth by 2030. Strong growth drivers in these industries will drive demand in the chip industry over the next decade.
World's Top Semiconductor Buyers Source: Gartner
All in all, although the chip industry is notoriously cyclical and has experienced several times of weakness in the short term, the long-term prospects for this critical sector are very bright.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
Read more
Comment
Sign in to post a comment
