Semiconductor stocks are looking more attractive after selling off this year, a Wall Street firm said Tuesday. Brokerage firm Piper Sandler said it was taking a “more positive position” in the sector and had upgraded AMD stock to buy.
Piper analyst Harsh Kumar said in a note addressed to clients, “Although we are not trying to call down, we believe that investors should buy semiconductor stocks at current levels.”
He added, “We are moving towards a more positive position in semiconductor stocks following our more cautious outlook since the beginning of the year.”
Kumar highlighted five semiconductor stocks as “top picks”. They Small instruments of the future (AMD), Impinge (PI), Marvel technology (MRVL), Unseemi (ON) and Qualcomm (QCOM).
AMD gets stock upgrades
Kumar upgraded AMD stock from neutral to overweight or buyable and raised its price target from 98 to 140.
In the stock market today, AMD stock rose 8.7% to close at 102.47. Meanwhile, Impinge advanced 2.3% to 47.24. Marvell rose 5.5% to 58.28. Onsime rose 6.1% to 58.50. And Qualcomm rose 4.3% to 139.69.
The Philadelphia Semiconductor Index, known as the SOX, jumped 5% on Tuesday. For the year, it is still 22.3% lower. SOX has the 30 largest semiconductor stocks traded in the United States
Semiconductor stocks have declined this year amid concerns that the chip is nearing the end of the uptrend cycle.
Catalyst for AMD shares
Kumar said he prefers AMD stock for the long-term catalyst from the middle. These catalysts include strong server trends and its Xilinx acquisition boosting its data center business. He also sees a slowdown in consumer PC sales offset commercial PC sales.
“The company’s core businesses are doing really well and benefiting from the secular trend,” Kumar said.
According to the IBD stock checkup, AMD stock ranks fifth out of 34 stocks in IBD’s Fableless Semiconductor Industry Group. It has an IBD composite rating of 86 out of 99.
IBD’s composite rating combines five individual proprietary ratings into one easy-to-use rating. A composite rating of the best growth stocks is 90 or better.
Follow Patrick Sitz on Twitter @IBD_PSeitz For more stories on consumer technology, software and semiconductor stock.
You may also like:
Video Book Publisher Take-Two Distributes Soft Booking, Outlook
Netflix stock beer has become the bull call bottom for video streamers
Apple iPhone maker Foxconn has warned of chilling demand for smartphones
Best Growth Stocks to Buy and View: See IBD Stock List Updates
Join IBD Live for stock ideas every morning before opening