UBS Initiates On Semis: Intel Is Golden, Micron Is A Sell, Nvidia, AMD And More

Some of the biggest winners in the entire stock market in recent years have been semiconductor stocks. But after huge run-ups in some popular names, stock picking has become even more important.

There may still be a handful of opportunities in semiconductor stocks, but investors need to know where to look.

The Analyst

UBS analyst Timothy Arcuri initiated coverage on the following 14 semiconductor stocks:

• Marvell Technology Group Ltd. MRVL, Buy rating and $38 target.
• Broadcom Ltd AVGO, Buy rating and $350 target.
• Intel Corporation INTC, Buy rating and $70 target.
• KLA-Tencor Corp KLAC, Buy rating and $150 target.
• Advanced Micro Devices, Inc. AMD, Neutral rating and $11 target.
• NVIDIA Corporation NVDA, Neutral rating and $250 target.
• Lam Research Corporation LRCX, Neutral rating and $220 target.
• Qorvo Inc QRVO, Neutral rating and $76 target.
• Applied Materials, Inc. AMAT, Neutral rating and $58 target.
• Skyworks Solutions Inc SWKS, Neutral rating and $105 target.
• QUALCOMM, Inc. QCOM, Neutral rating and $56 target.
• Teradyne Inc. TER, Neutral rating and $49 target.
• Texas Instruments Incorporated TXN, Sell rating and $85 target.
• Micron Technology, Inc. MU, Sell rating and $35 target.

The Thesis

The cyclical boom in the semiconductor business may be coming to an end, Arcuri says, but investors shouldn’t confuse the cyclical nature of the business with the longer-term secular growth story.

“If data is the new oil, AI is the combustion engine that will push more silicon into every vertical of the economy,” Arcuri said in a note.

Still, with the current cycle slowing, he said stock selection is critical to avoid being caught in the downdraft. UBS has tried to single out specific stocks that could beat consensus earnings expectations or where analysts seem to be missing a major business transition. At the same time, Arcuri expects the downturn to be particularly hard on memory stocks, which investors should approach with caution.

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