Are Semiconductor Stocks Poised for a Q4 Surge?
As we near the end of the year, investors are looking for potential opportunities to capitalize on in the final quarter. According to Evercore ISI, chip stocks could be the key trade of the fourth quarter, with the potential to surpass their bull market highs. Rich Ross, head of technical analysis at the firm, believes that semiconductor stocks, as represented by the VanEck Semiconductor ETF (SMH), could see a 20% upside into year end.
Despite already surging more than 40% this year, the SMH ETF is still more than 13% off its recent high. On the other hand, the iShares Semiconductor ETF (SOXX) has climbed over 18% this year but is down by more than 14% from its July high. However, Ross remains optimistic about the technical set-up for semiconductor stocks moving forward.
With semiconductor stocks double bottoming above key support levels, there is a strong indication of new upside potential for the sector. Ross believes that Semis are in a prime position to outperform other sectors, as they are still around 20% from their all-time high. This, coupled with the absence of inflation and presence of rate cuts, sets the stage for a Q4 surge to new highs.
If you’re looking for buying opportunities in the semiconductor sector, Ross highlights companies like Broadcom, Taiwan Semiconductor Manufacturing, Micron Technology, and Nvidia. These companies could potentially see significant gains in the coming months as semiconductor stocks continue to strengthen.
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