A shortage of semiconductors has hit the economy hard during the pandemic, especially the automotive industry. But some chip companies remain strong.
Goldman Sachs has compiled a list of its top industry picks that are “best positioned to support the future semiconductor ecosystem,” the company’s analysts wrote in a commentary.
The list includes:
1. Applied materials (AMAT) – Get Applied Materials, Inc.. Analysts said the company benefits from:
“strong fundamentals for wafer fabrication equipment in the near term and throughout the cycle,
“Applied’s ability to identify and address critical customer technology inflections through its broad product portfolio,
“potential continued expansion of margins through increasing scale and value-reflective product pricing”, and
· “sustained dividends and redemptions”.
Goldman has a 12-month price target of $151 for the stock, which recently traded at $115.22.
2. Taiwan semiconductor (TSM) – Get the report of Taiwan Semiconductor Manufacturing Co. Ltd.. Goldman analysts like:
“the industry’s underlying structural growth areas, such as 5G/artificial intelligence/high performance computing,
· “TSM’s strong technology leadership and execution,
“a softening competitive landscape,
· “and sustainable returns for shareholders.”
Goldman has a price target of $168 for the stock, which recently traded at $99.15.
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3. KLA (KLAC) – Get KLA Corporation report. Analysts cite the company’s “favorable peak exposure, segment-leading gross margins and strong balance sheet.” The importance of process control now and in the future “will position KLAC well for a more challenging macroeconomic environment in 2023,” they said.
Goldman has a price target of $430 for the stock, which recently traded at $328.74.
4. Research (LRCX) – Get the report from Lam Research Corporation. “We believe the market is undervaluing Lam’s improved competitive position in advanced logic/foundry markets,” the analysts said.
“We believe Lam is well positioned to gain market share as the company’s competitive strengths developed for memory markets become directly applicable to enable the necessary power and performance advantages that Foundry and Logic aim to achieve. get on more advanced nodes. »
This strength stems from “foundry and logic process roadmaps prioritizing higher aspect ratio architectural features, e.g. gated transistor structures all around, and relying on higher deposition techniques. sophisticated”.
Additionally, “we expect gross and operating margins to improve as supply momentum normalizes (or at least improves) and the company continues to expand at its Malaysian facility,” analysts said.
Goldman has a price target of $648 for the stock, which recently traded at $466.92.
5. ASML (ASML) – Get the ASML Holding NV report From the Netherlands. “We continue to view ASML as a basic digital enabler, given its monopoly position in extreme ultraviolet (EUV) lithography, which is critical to facilitating the cost-effective production of advanced semiconductors,” the CEOs said. Goldman analysts.
They point to:
“strong industry spending momentum suggesting sustainability of capital spending,
· “regional movements to diversify global production…,
“upside risks for EUV application service providers…translating into better gross margin profitability…,
· “ASML’s long-term technology roadmap…”
Goldman did not have a price target for ASML’s dollar shares.
Other stocks on Goldman’s list are Japanese companies Tokyo Electron (TOELY) and Filter.