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The Zacks Analyst Blog Highlights: Technology Select Sector SPDR, Advanced Micro Devices, NVIDIA, Micron Technology and iShares PHLX Semiconductor


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For Immediate Release

Chicago, IL - December 6, 2017 - Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include  Technology Select Sector SPDR ETF XLK , Advanced Micro Devices AMD , NVIDIA Corp. NVDAMicron Technology, Inc. MU and iShares PHLX Semiconductor ETF SOXX .

Here are highlights from Tuesday's Analyst Blog:

Is the Super-Cycle for Semi Stocks Nearing Its End?

The marvelous run of the semiconductor stocks that started in the second half of 2016 seems to be fading with one bad news after another. The industry, which is still reeling under the effect of Morgan Stanley's Nov 27 report on NAND prices, received a new blow last Friday in the form of a corporate tax rate cut, which, analysts believe will hurt the entire technology sector.

The House and Senate, on Dec 1, approved the government's proposal of cutting the corporate tax rate to 20% from the current 35%. This is a huge achievement for President Trump, as he will be able to fulfill one of his most ambitious electoral commitments in nearly more than a year of his election.

However, this does not go well with the technology stocks as the sector enjoys several tax benefits and therefore has lower effective tax rate. Citing the S&P Global data, Bloomberg stated, "Among sectors, the 18.5 percent effective tax rate enjoyed by the group is the third-lowest among U.S. large caps."

Analysts believe immediate beneficiaries of the recent tax reforms will be companies across sectors like finance, telecom, consumer discretionary and industrials which fall under the high tax bracket.

In such a scenario, investors are likely to move their funds into sectors that will gain the most due to the latest tax reform. In fact, the process has already started, as reflected by the 2% decline in the Technology Select Sector SPDR ETF value over the last two trading days.

Semiconductor Stocks Worst Affected

Although tech heavyweights, including Apple, Microsoft, Facebook and Alphabet, witnessed fall on Friday's tax cut news, semiconductor stocks have been affected the most.

In the semiconductor space, some prominent stocks like Advanced Micro Devices, NVIDIA Corp. and Micron Technology, Inc. have plunged nearly 7.9%, 7% and 5.9%, respectively since the news surfaced. Also, the iShares PHLX Semiconductor ETF has lost approximately 3.5% of its value in the last two trading days.

Cash In Before the Super Cycle Ends

The latest tax reform has also fueled the controversy about the end of the semiconductor super cycle, which first sparked in late November, when  Morgan Stanley downgraded several memory chip makers  on concerns of declining NAND prices and disappointing earnings growth projection for 2018.

Some analysts also believe semiconductor stocks will witness massive corrections in share prices due to their hefty valuation. Investors are likely to pull back their investments from tech stocks and look for other sectors which have potentials of giving higher returns.

Looking at the current scenario and hefty valuations of semiconductor stocks, it is wise to cash in your investment before the stocks start tumbling drastically.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss . This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report

SPDR-TECH SELS (XLK): ETF Research Reports

ISHARS-PHLX SEM (SOXX): ETF Research Reports

NVIDIA Corporation (NVDA): Free Stock Analysis Report

Micron Technology, Inc. (MU): Free Stock Analysis Report

To read this article on Zacks.com click here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Stocks
Referenced Symbols: AMD , XLK , SOXX , NVDA , MU


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