Semi Conductor Stocks In Focus (NVDA, AMD, MU, TSMC)

Leading chip stocks in the semiconductor industry include Intel Corporation (NASDAQ: INTC), Advanced Micro Devices (NASDAQ: AMD), NVIDIA Corporation (NASDAQ: NVDA), Qualcomm Incorporated (NASDAQ: QCOM), Texas Instruments (NASDAQ: TXN), Micron Technology (NASDAQ: MU), Broadcom Inc. (NASDAQ: AVGO), Taiwan Semiconductor Manufacturing Company (NYSE: TSM), and Samsung Electronics (KRX: 005930).

Semiconductor equities have experienced a resurgence in 2023 following a challenging 2022. The iShares Semiconductor ETF, an indicator of the sector’s performance, has advanced close to 25% YTD, significantly outpacing major U.S. benchmarks.

Nevertheless, the notoriously cyclical industry has encountered recent disruptions. TSMC disclosed a contraction in monthly revenue for the first time in almost four years, while Samsung announced a staggering 96% reduction in quarterly earnings. Furthermore, the South Korean semiconductor manufacturer declared plans to curtail memory chip production due to decelerating global growth, waning demand, and excess supply.

Despite these setbacks, Wall Street remains optimistic, as several investment banks have issued favorable assessments of both semiconductor companies following the announcements.

Morgan Stanley maintains its bullish stance on Taiwan Semiconductor Mfg. Co. Ltd (TSMC) despite anticipated near-term headwinds. The investment bank’s analysts, led by Charlie Chan, expect TSMC to lower its full-year revenue forecast and provide more conservative 2023 capex guidance due to a subdued semiconductor demand recovery in 2H23. Morgan Stanley also anticipates weaker-than-expected 2Q23 revenue guidance.

As TSMC’s Q1 earnings report approaches on April 20th, Morgan Stanley’s base case scenario envisions a prolonged inventory correction. Nonetheless, the bank continues to recommend an overweight position on TSMC for its long-term technology leadership, maintaining a price target of 700 Taiwanese dollars ($22.97) per share, representing approximately 30% upside from its recent closing price.

Over 90% of analysts covering TSMC rate it as a “buy,” with an average potential upside of 16.9%. Tim Seymour, CIO of Seymour Asset Management, also views the recent dip in TSMC’s share price as a buying opportunity, suggesting investors seize the chance to own the stock at its current valuation of roughly 16 times earnings.


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