For Immediate Release
Chicago, IL – November 20, 2024 – Today, Zacks Investment Ideas feature highlights Vaneck Semiconductor ETF SMH, Nvidia NVDA, Super Micro Computer SMCI, Dell DELL and Arm Holdings ARM.
5 Reasons to Stay Bullish on Semiconductors
Semiconductors: The Leading Industry
Over the past 20 years, semiconductor companies have played the most integral role in the U.S. economy. Semiconductors power almost all modern technology, from smartphones to high-performance computers. The technology and constant innovation in this highly competitive industry have been responsible for breakthroughs in industries like electronics, automobiles, and healthcare.
Chip demand has increased exponentially over the past 15 years thanks to rising demand fueled by the Internet of Things (IoT), artificial intelligence (AI), and the rise of 5G networks. The Vaneck Semiconductor ETF,which tracks a basket of publicly traded semis, is up a mindboggling 2,320.7% over the past 15 years.
5 Reasons to Invest in Semiconductor Stocks
With such a robust performance, many investors feel they have already missed the move. Below are five reasons more meat is left on the bone for semiconductor stocks:
1. Data Center & AI Demand Remain Strong
SEMI (@SEMIconex) states,“The global semiconductor industry saw strong growth in Q3 2024 – marking the first positive QoQ increases across all key indicators in two years.”
2. Forward Estimates for Nvidia
Wall Street analysts believe the rapid earnings growth will continue in Nvidia,the undisputed semiconductor king. Zacks Consensus Estimates suggest that NVDA’s quarterly EPS will grow 85% year-over-year and will achieve hockey-stick like growth in 2025 and 2026.
3. November Seasonality
Though semi stocks are slightly lower month-to-date, November is typically a very strong month for the group. The SMH ETF has been green in 10 out of the past 12 Novembers, with the only losses being minor (-0.29 in 2013 and -2.02% in 2017).
4. The Wall of Worry is Intact
Wall Street is rarely obvious, and stocks tend to climb the proverbial “Wall of Worry.”Super Micro Computer, an Nvidia supplier, injected pessimism into the group after it delayed filing its financials. However, Tuesday, SMCI shares spiked after the company found a new auditor and announced it plans to file updated financials and avoid a Nasdaq delisting. Regardless of what happens with the SMCI saga, Dell and other competitors would likely be able to fill the SMCI void.
5. Technicals
Though semis have digested gains recently, several leaders like Arm Holdings are retreating to crucial support levels. ARM shares are reverting to their 200-day moving average, a level the stock found buyers at in the first two visits.
Meanwhile, though the AI boom has been the primary industry driver, emerging market segments like autonomous driving promise to keep the growth steady.
Bottom Line
Semis are an integral part of the U.S. economy. Though chip stocks have stalled recently, forward growth remains strong, and several indicators suggest that higher prices are on the horizon.
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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 https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Dell Technologies Inc. (DELL) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
ARM Holdings PLC Sponsored ADR (ARM) : Free Stock Analysis Report
Super Micro Computer, Inc. (SMCI) : Free Stock Analysis Report
VanEck Semiconductor ETF (SMH): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
