Semiconductor Stocks Are Surging. Why They Might Just Be Getting Started.

  • 📰 MarketWatch
  • ⏱ Reading Time:
  • 84 sec. here
  • 3 min. at publisher
  • 📊 Quality Score:
  • News: 37%
  • Publisher: 97%

United States News News

United States United States Latest News,United States United States Headlines

Shares of Broadcom, Nvidia, and AMD are rising Tuesday as the sector looks to regain favor with investors.

Semiconductor stocks are surging following a recent pullback—and it may be time for investors to start buying again.

The iShares Semiconductor exchange-traded fund , up 1.8% on Tuesday, is having a very good day, which is a nice change of pace. The ETF, which counts Nvidia , Broadcom , and Advanced Micro Devices as its top three holdings, has dropped about 8% from its peak for the year hit in early August. And that too was a change of pace, coming as it did after the fund posted a double-digit gain to start the year as the rise of the artificial-intelligence drove demand for more chips.

The rally comes right where you’d expect it to. Valuations look reasonable. The semiconductor ETF’s forward price/earnings multiple is just over 21 times, down from 24 at its recent peak. That’s not so expensive when relative growth is taken into consideration. The companies in the fund, in aggregate, are expected to see earnings per share grow at a roughly 17% annual clip in 2024 and 2025, according to FactSet. The multiple is just 1.

Semiconductor stocks are also trading close to a key level, where buyers do tend to come in. At about $491, the semiconductor ETF is just above “support” at $478, near August’s closing low. That’s also a level that technically keeps the fund in its uptrend since October of last year. So long as that level holds, it’s a sign that investors believe semis can keep growing—and their stocks can keep rising.

That, of course, reflects the long-term fundamental care for the stocks as well. “The semiconductor industry is now in the midst of a revival, primarily induced by the surge in AI-centric technological advancements,” writes Evercore ISI strategist Julian Emanuel.Write to Jacob Sonenshine at jacob.sonenshine@barrons.com

 

Thank you for your comment. Your comment will be published after being reviewed.
Please try again later.
We have summarized this news so that you can read it quickly. If you are interested in the news, you can read the full text here. Read more:

 /  🏆 3. in US

United States United States Latest News, United States United States Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

Analysts pick 4 high-performance semiconductor stocks to play the booming marketThe Taiwan-based analysts say there's 'booming demand for high-performance chips' and reveal their favorite stocks to buy.
Source: CNBC - 🏆 12. / 72 Read more »

3M, Hawaiian Electric stocks surge, NovoCure shares plunge and other stocks on the moveShares of 3M, XPeng and other Chinese shares were among the most actively traded ahead of Monday's market open.
Source: MarketWatch - 🏆 3. / 97 Read more »