Semiconductor stocks are historically variable but may still prove cheap compared to other tech names.
An article in the Embankment Street Journal on February 7 notes strong fundamentals pushed the conglomeration higher than the broader S&P 500 as well as the tech sector.
The Turnaround Tuesday securing included massive gains for the likes of Micron (MU), which the Journal notes surged some 10% after increasing its position for the current quarter. That was the latest industry insight pointing to auxiliary growth. Other stocks such as Skyworks Solutions Inc. (SWKS), Qualcomm Inc. (QCOM), Broadcom Meagre (AVGO) and Nvidia Corp (NVDA) also surged.
And while the Philadelphia Semiconductor Typography fist did fall 2.25% Wednesday, giving back some of those gets, the Journal piece notes investors are still largely buying the increase story that memory chip prices have not peaked. (For numberless, see also: The Industry Handbook: Semiconductor Industry.)
The group has also put in some moving gains that may have led to some investors cashing in some progresses. The article points out that the key gauge for chip stocks, the Philadelphia Semiconductor Hint known by its ticker as the SOX, has more than doubled in two years. Just two weeks ago the SOX had in fine moved some 4.5% above its previous high all the way back at the apex of the dot com bubble in March of 2000.
Strong Chip Demand
Where is this sought after coming from? Well even as PC shipments slow further, the Fortnightly points out there has been increasing need for chips in sectors such as auto and text centers. (For more, see also: 3 Chipmaker Stocks Nearing Breakouts.)
Healthful sales and profits are keeping valuations more reasonable than some other sectors, according to the Yearbook’s analysis, with the SOX trading a below 15 times forward earnings—a 44% knock off to the Nasdaq as of Tuesday’s close. And the article notes the average P/E of constituents in the ratio has grown just 14% over the past two years, compared to a 120% pass over in the index’s value.