Nvidia (NVDA), Advanced Micro Devices (AMD), Power Integrations (POWI), ASML (ASML) and Marvell Technology (MRVL) are top semiconductor stocks to watch at or near buy range.
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The world is facing a massive chip shortage as demand for consumer electronics soared during the pandemic.
Semiconductor stocks have benefited from the work-from-home trend. The rise of the delta Covid-19 variant has forced Apple (AAPL), Lyft (LYFT) and other companies have delayed their return to office date until 2022.
The storage is also affecting automakers who use semiconductors in displays and autonomous driving capabilities.
Chip stocks are great for investors looking for a safe haven amid the lingering Covid-19 pandemic. Here’s how to find the best stocks in the sector.
Chip Stocks With Strong Fund Fundamentals
One way to find the best stocks is to look at their IBD Composite Ratings. The Composite Rating compiles scores on key fundamental and technical metrics: earnings and sales growth, profit margins, return on equity and relative price performance.
Advanced Micro Devices has a perfect 99 rating. Power Integrations, ASML and Nvidia have a 97 rating and Marvell Technology has a 92 rating.
Investors should be focused on stocks with a Composite Rating of 90 or higher but it isn’t the only metric investors should keep track of.
The IBD 50 list shows stocks that have strong relative price strength and top-notch fundamentals. ASML is ranked No. 28 and Nvidia is ranked No. 43.
AMD Stock
Advanced Micro Devices makes central processing units, or CPUs, for personal computers and servers. But it is also gaining ground in making graphics processing units, or GPUs, that make video games more realistic.
Shares rose 0.8% to 104.51 on the stock market Friday, but still fell 5.3% for the week. AMD stock had a strong breakout from a cup with handle base following earnings late last month. The stock reached an all-time high on Aug. 4. While it’s now pulled back to its 21-day line, according to IBD MarketSmith charts. If the stock can bounce off that key line and hit an entry point of 106.18, investors have a second chance at buying AMD stock or adding more to their portfolio. But make no mistake. This would be an aggressive entry.
AMD reported better-than-expected second-quarter results last month and guided higher for the current quarter and full year.
AMD stock is No. 1 in IBD’s Electric-Semiconductor Fabless Group.
Nvidia Stock
Nvidia, a fabless chipmaker, is a leader in GPUs. But as competition grows in the GPU space, it’s also expanding into AI chips for use in supercomputers, Amazon‘s (AMZN) data centers and Nio (NIO) driverless cars.
As well as being featured on the IBD, 50 list, Nvidia is on IBD’s Leaderboard and SwingTrader. Late Wednesday, Nvidia reported Q2 earnings and sales that beat Wall Street analyst estimates.
Nvidia cleared an early entry of 197.70 on Thursday, breaking a downtrend in a handle. On Friday, shares popped 5.1% to 208.16, breaking out past the official buy point of 207.43 from a cup-with-handle base.
ASML Stock
ASML, a Dutch semiconductor equipment maker, is currently the only producer of sophisticated gear for making integrated circuits at the smallest possible dimensions.
Shares rose 0.85% to 788.18 Friday, edging down 0.1% for the week. ASML stock is forming a three-weeks tight pattern with an 805.74 entry.
This might be a good place for existing holders to add shares. But ASML stock has a recent history of returning to its 50-day or 10-week line. As a Long-Term Leader, buying off the 50-day line makes sense for ASML stock.
On July 21, ASML reported mixed Q2 results with earnings beating but revenue falling slightly short.
ASML is the No. 2 stock in IBD’s Electric-Semiconductor Equipment group after Kulicke and Soffa Industries (KLIC).
Marvell Stock
No, the stock has nothing to do with the Avengers comics. Marvell makes networking and data storage chips used in cloud computing, automotive, communications and other applications.
Shares dipped 0.9% to59.85 last week. But on Thursday, Marvell stock rebounded bullishly off its 50-day/10-week line. Shares 1.5% to 59.85 on Friday, still in buy range. It’s possible MRVL stock will go on to form a short consolidation, but would need a couple more weeks for that.
Marvell stock has an IBD Relative Strength Rating of 90 out of 99. That means it has outperformed 90% of stocks over the past 12 months.
Power Integrations Stock
The company is a supplier of electronic components used in high-voltage power-conversion systems for consumer appliances, computers, TV and LED lighting.
Shares rose 1.3% to 100 on Friday. Intraday, POWI stock hit a record 102.32 and briefly clearing a 100.08 entry. The entry stems from a handle that’s above the left side of the eight-month consolidation, offering an entry at 100.08.
POWI stock is No. 2 in IBD’s Electric-Semiconductor Manufacturing group.
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