The short-term surge in semiconductor stocks is expected to continue, according to investment company Citibank (NYSE:C), which said on Monday that despite some businesses providing positive or in-line reports, there were some indications of “fraying around the edges,” as NXP Semiconductors (NASDAQ:NXPI) mentioned some general weakness in Europe and fewer shortages.
Analyst Christopher Danely noted updates from companies like Texas Instruments (NASDAQ:TXN), Avnet, and NXP Semiconductors were seen as “largely positive.” Avnet (AVT) cited declining lead times and a decreasing backlog, while Texas Instruments (NASDAQ:TXN) mentioned the effects of China’s shutdowns.
The most bullish semiconductor stock, according to Danley, was ON Semiconductor (NASDAQ:ON), whose growth is fueled by silicon carbide and has 66% exposure to the automotive and industrial markets.
Danely remarked in a message to customers that “we do not foresee a lot of bad news in semis until the second half of September.” As a result, we think the short-term surge may continue for a few more weeks. Danely noted that push-outs and order cancellations are likely to occur, possibly as soon as later this month, even though the short-term rally is anticipated to extend for a little while longer. In light of this, Danely continued, “we anticipate the group to hit new lows either before or during earnings in October when the news comes out.”
Semiconductor Stocks To Buy
On account of rising margins and earnings per share, Analog Devices (ADI) is once again the company’s top semiconductor stock pick, followed by ON Semiconductor (NASDAQ:ON), Advanced Micro Devices (NASDAQ:AMD), Micron Technology (NASDAQ:MU), and GlobalFoundries (NASDAQ:GFS).
Texas Instruments (NASDAQ:TXN) and Advanced Micro Devices (NASDAQ:AMD) were included in a list of businesses that an investment firm said would profit from themes like artificial intelligence, big data, and cybersecurity being adopted more quickly.
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