Are Semiconductor Stocks a Buying Opportunity?
If you have been keeping an eye on the semiconductor sector, you may have noticed that chip stocks have been on a rollercoaster ride lately. CNBC’s Jim Cramer recently recommended three chip stocks to buy at a discount: Micron, AMD, and Arm. According to Cramer, the chip stocks have sold off too hard, and the reasons to like this group remain intact.
The chip sector has seen a recent retreat, with the SMH semiconductor ETF down more than 18% from its 52-week high in July. However, Cramer pointed out that the fund is still up more than 25% year-to-date and believes that the sector needed to cool down after a rapid rally.
One of the concerns in the industry is a decline in enterprise spending on artificial intelligence, as well as the possibility of a recession before the Federal Reserve can cut interest rates. Some investors are worried that companies investing in AI technology are not seeing adequate returns on their investments, as evidenced by Nvidia’s recent quarter.
Despite these challenges, Cramer remains optimistic about the semiconductor sector. He believes that Nvidia’s results were impacted by a lack of supply, not demand, and that the AI boom is still very much alive.
When it comes to specific companies, Cramer highlighted AMD as a solid player in the semiconductor space, with strong demand for its products. Micron was praised as the market leader in memory chips, and Arm was mentioned for its predictable revenue stream from licensing royalties. Arm’s stock has more than doubled since its market debut, and a recent report that Apple would be using its chip design for the iPhone 16 gave the stock a boost.
Overall, while the semiconductor sector may be facing challenges, there are still opportunities for investors to consider. Keep an eye on these chip stocks as they could present a buying opportunity at a discount.
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Disclaimer: The CNBC Investing Club Charitable Trust holds shares of AMD, Apple, and Nvidia.
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