Semiconductor stocks analysis Paul Meeks
Paul Meeks

Paul Meeks

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A bearish call by a sell-side — I’m on the buy-side — analyst has hit semiconductor stocks. He (in this case) didn’t quibble with the near-term positive outlook for the industry — who could with commodity chips in record short supply? — but he still rang the bell for the end of the semis cycle, given that desperate customers have ordered too much product. Suspected double ordering and long lead times for deliveries have been signals in previous cycles that the party was ending and that a hangover would follow. However, in my view, that day is too far off in this cycle to worry about, so if you exit your semis stocks now, you’ll be sorry. 

First, I think that this global supply shortage will last well into 2022. Second, 5G wireless, cloud computing, artificial intelligence, and other killer apps will drive even greater demand for chips. We may not hit the sweet spot for this cycle for some time. It’s too early to talk about its end. Of course, this bearish Street analyst may be proven right at some point. A broken clock is right twice a day. But I recommend that you lean in rather than away from key semis vendors for the foreseeable future. I widely own these chip stocks in alphabetical order:

AMAT
AVGO
CDNS
KLIC
MCHP
MU
NVDA
NXPI
QCOM
QRVO
SNPS
SWKS
SYNA
TSM

I’m only uncomfortable short-term with QCOM. I also am concerned that NVDA’s acquisition of ARM, which too many investors may be counting on, will be quashed by regulators. I like the logic behind the deal, but it’s $40 billion prices are egregious. Nonetheless, you’ve 12 other names here that pass my semiconductor stocks sniff test, with my clear favorite being MU.

Investment Advisory Services offered through Independent Solutions Wealth Management, LLC, an SEC Registered Investment Adviser.
All opinions expressed Paul Meeks are solely Meeks’ opinions and do not reflect the opinions of Independent Solutions Wealth Management, LLC (“ISWM”). You should not treat any opinion expressed by Meeks as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion for educational purposes only and does not constitute investment, legal or tax advice, an offer to buy or sell any security or insurance product; or an endorsement of any third party or such third party’s views. Meeks opinions are based upon information he considers reliable, but neither ISWM nor its affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Meeks, ISWM, its affiliates and/or subsidiaries are not under any obligation to update or correct any information provided on this website. Meeks statements and opinions are subject to change without notice. No part of Meeks compensation from ISWM is related to the specific opinions he expresses. Past performance is not indicative of future results. Neither Meeks nor ISWM guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment discussed. Strategies or investments discussed may fluctuate in price or value. Investors may get back less than invested. Investments or strategies mentioned may not be suitable for you. This material does not take into account your particular investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. Before acting on information, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from an investment adviser.

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