Uncertainty on Wall Street means even the best semiconductor stocks continue to struggle. Shortages remain across the sector while industries from consumer electronics to automotive manufacturing vie for the limited supply.
Chipmakers have ramped up production, but the bottleneck comes from a lack of enough fabrication plants, or fabs. Fortunately, semiconductor manufacturers are working to address the issue. Research from SEMI, a global association, highlights, “There are 25 new construction projects of volume fabs in 2022… Fab equipment spending for 2022 is expected to break the $100 billion mark.”
For now, however, investors remain wary of semiconductor shares. Exchange-traded funds (or ETFs) tracking the chip sector, such as the Invesco Dynamic Semiconductors ETF (NYSE:PSI), and the iShares Semiconductors ETF (NASDAQ:SOXX), have fallen around 36% year-to-date(YTD). In comparison, the S&P 500 Index has dropped 17% over the same period.
The ongoing supply-chain crisis is undeniably significant but will likely be alleviated as production begins in the new facilities. As a result, semiconductor stocks should experience a stronger rebound compared to the overall market in the coming months.
Leading chipmakerAdvanced Micro Devices (NASDAQ:AMD) has a wide-ranging portfolio of products, including central processing units (CPUs), graphics processing units (GPUs) and various other types of processors. Its flagship products include the Zen architecture, Ryzen CPUs and Radeon GPUs.
In early May, Advanced Micro Devices reported first-quarter financials. Revenue was $5.9 billion, representing a 71% increase year-over-year. Diluted earnings per share (EPS) was $1.13, compared to 52 cents the prior year. Free cash flow (or FCF) was $924 million.
The company recently announced the Ryzen Embedded R2000 Series system-on-chip (SoC) processors. Analysts point out the optimized performance for industrial and internet of things (IoT) solutions. According to AMD, the new second-generation processors deliver “up to 81 percent higher CPU and graphics performance” compared to the prior generation R1000 chips.
AMD stock has tumbled more than 37% YTD. Shares are trading at 19.1 times forward earnings and 5.5 times sales. Meanwhile, the 12-month median price forecast stands at $120.
Analog Devices(ADI)
Analog Devices (
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52-week range: $138.50 – $191.95
Analog Devices (NASDAQ:ADI) manufactures a variety of signal processing integrated circuits (ICs). The chip name focuses on mixed signal, radio frequency (RF), as well as digital and sensor technologies. Over a 100,000 global customers use ADI products in communications, automotive, industrial and consumer markets.
In mid-May, Analog released Q1 earnings. Revenue grew 79% YOY to $2.97 billion. Adjusted diluted EPS was $2.40, compared to $1.54 the year before. Quarterly FCF was $1.1 billion.
Recently, the company detailed a new collaboration with Synopsys (NASDAQ:SNPS), where Analog will provide products for Synopsys’ Saber simulation tool. These solutions will accelerate the design process, decreasing the time required to bring a new product to market.
So far in 2022, ADI stock has declined over 6%. The current price supports a dividend yield of 1.9%. Forward price-to-earnings (P/E) and price-to-sales (P/S) numbers are 15.5x and 7.8x, respectively. Wall Street’s 12-month median price forecast is at $192.
Intel(INTC)
intel stock
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52-week range: $35.54 – $56.54
Intel (NASDAQ:INTC) is the world’s leading semiconductor chip manufacturer. On average, two-thirds of all computers use Intel processors. The latest iteration of Intel CPUs, the 12th generation Core, was released earlier this year. The company also maintains a substantial research division known as Intel Labs.
The chip leader announced Q1 metrics on April 28. Non-GAAP revenue was $18.4 billion, down 1% YOY. Diluted EPS was 87 cents, compared to $1.34 the previous year. Adjusted FCF was $5.5 billion.
Intel recently unveiled the NetSec Accelerator Reference Design for improved network and security processing performance. Wall Street is keen to see how this new product will contribute to Intel’s top line.
INTC stock has lost around 21% since the beginning of the year. As a result, the dividend yield has gone up to 3.6%. Shares are trading at 10.8 times forward earnings and 2 times sales. Analysts’ 12-month median price forecast stands at $45.
KLA(KLAC)
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52-week range: $282.83 – $457.12
KLA (NASDAQ:KLAC) is one of the leading semiconductor equipment providers. It develops advanced process control and process-enabling solutions for manufacturing wafers integrated circuits, printed circuit boards, as well as flat panel displays. The company invests heavily in research and development, having spent $3.3 billion in the last four years alone.
In late April, KLA issued Q3 FY22 financial results. Total revenues were $2.29 billion, increasing from $1.8 billion the prior year. Diluted EPS was $5.13, compared to $3.85 the year before. FCF was $718.6 million.
Recently, the company launched Frontline Cloud Services,the first cloud-based design platform for complex printed-circuit boards (PCBs). The software solution should cut back on IT bottlenecks and time devoted to analyses.
KLAC’s stock price has dropped over 16% YTD, and now supports a dividend yield of 1.2%. Forward P/E and P/S numbers are 13.6x and 5.8x, respectively. Wall Street’s 12-month median price forecast is at $392.50.
Lattice Semiconductor (LSCC)
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52-week range: $43.41 – $85.45
Lattice Semiconductor (NASDAQ:LSCC) designs low-power field-programmable gate arrays (FPGAs), which “can be reprogrammed to desired application or functionality requirements after manufacturing.” The company maintains development centers in Shanghai and Silicon Valley.
In early May, Lattice Semiconductor released Q12022 earnings. Revenue increased 30% YOY to $150 million. Adjusted diluted EPS was 37 cents, compared to 22 cents the previous year. Cash and equivalents totaled $123 million.
The chip company recently introduced the Lattice MachXO5-NX line of FPGAs, the fifth device built on the Lattice Nexus platform. Analysts highlight that it will help monitor systems in communications, industrial, and automotive markets.
LSCC stock has fallen more than 23% since the beginning of the year. Shares are trading at 33.3 times forward earnings and 13.6 times sales. Finally, the 12-month median price forecast stands at $71.
Monolithic Power Systems(MPWR)
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52-week range: $348.02 – $580
Monolithic Power Systems (NASDAQ:MPWR) provides small, easy-to-use power management solutions. Its products are used in numerous industries, such as automotive, industrial, robotics, telecom and high-end consumer applications.
The power management solutions heavyweight reported Q1 financial results on May 2. Revenue was $377.7 million, a 48.4% increase YOY. Diluted EPS was $2.45, compared to $1.46 the year before. Cash and equivalents totaled $260.6 million.
Recently, the company launched the MPSafe portfolio of automotive products emphasizing safety. The entire portfolio meets various Automotive Safety Integrity Level (ASIL) requirements set forth by the ISO26262 international standard. These products include a six-channel voltage monitor, a 12-channel system sequencer, and a multi-channel camera power management IC.
So far in 2022, MPWR stock has declined 8% but still has returned around 15% over the past year. Forward P/E and P/S numbers are 36x and 14.8x, respectively. Analysts’ 12-month median price forecast is at $550.
Our final semiconductor stock is ON Semiconductor (NASDAQ:ON), a leading name in intelligent power and sensing technologies. Its portfolio includes around 80,000 parts used in automotive, industrial, 5G, IoT and healthcare as well as aerospace and defense (A&D).
In early May, management put outrecord Q1 earnings. Revenue was $1.95 billion, an increase of 31% YOY. Diluted EPS was $1.22, compared to 35 cents a year ago. FCF was $304.8 million.
The company recently announced the launch of the NCN26010 Ethernet controller. The new device can reduce the amount of wiring required by up to 70% while still increasing data throughput. Additionally, the new controller is physically smaller and easier to integrate than previous models.
ON stock has lost 10% since the beginning of 2022 yet has appreciated 71% over the past 12 months. Shares are trading at 12 times forward earnings and 3.5 times sales. Meanwhile, the 12-month median price forecast stands at $70.
On the date of publication, Tezcan Gecgil, Ph.D., did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
