The semiconductor industry has gotten absolutely crushed in the last year, with the SPDR S&P Semiconductor ETF XSD trading down more than 40% from its highs at one point this year.
Demand for semiconductors has dropped from its peak due to weakness in the crypto and gaming sectors.
Now some big banks are thinking it’s time to start looking at some of the chip names again.
There is upside to be found in the semiconductor industry, but it will be selective, Credit Suisse analysts said this week.
Credit Suisse's Semiconductor Picks: The companies that Credit Suisse highlighted as long-term growth names are Nvidia Corp NVDA, Marvell Technology MRVL, Advanced Micro Devices AMD and Monolithic Power Systems MPWR.
Credit Suisse outlined the different areas of growth potential for semiconductors: cloud computing, AI and automotive.
The analysts said headwinds like a cyclical drop in demand have been largely priced into the current stock prices, and the upside potential outweighs downside risk.
BofA Lifts Nvidia Price Target: Bank of America BAC reiterated its price target of $205 for Nvidia after the company reported earnings Wednesday. If Nvidia does reach the $205 price target, that would be good for about a 33% gain from its current price of around $153.
The Bottom Line: The chip industry faces many headwinds: higher production costs, a potentially large decrease in demand and other issues. Since most of the chip stocks have drawn down by a large amount, analysts are starting to say we’ve seen the worst and that it’s time to get bullish on semiconductor names.
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