For immediate release
Chicago, IL – December 10, 2021 – Zacks.com announces the list of stocks featured on the Analyst Blog. Every day, Zacks Equity Research analysts discuss the latest news and events affecting stocks and financial markets. Stocks recently featured on the blog include: NVIDIA Corp. NVDA, Xilinx Inc. XLNX, QUALCOMM Inc. QCOM, Lam Research Corp. LRCX and ON Semiconductor Corp. ON.
Here are the highlights from Thursday’s analyst blog:
Has Wall Street Already Considered a Hawkish Fed? 5 selections
Wall Street has overcome the fluctuations led by Omicron, at least for now, thanks to early data showing that the new variant of the coronavirus may not be as severe as Delta. Market participants are now more concerned about a possible shift in the Fed’s stance toward tougher policies. It seems that a likely change in the central bank’s monetary policies has already been incorporated into the valuation of the US equity markets.
At this stage, it will be prudent to invest in technology stocks, especially in the semiconductor industry, with a favorable Zacks range that has skyrocketed in the last month, defying severe market volatility. The semiconductor industry has great potential as a global shortage of chips persists. Our five selections are NVIDIA, Xilinx, QUALCOMM, Lam research Y IN Semiconductor.
Markets are likely to influence a Fed policy shift
On November 30, in his testimony before a Senate committee, Fed Chairman Jerome Powell said that the central bank will discuss accelerating the phase-down process of its quantitative easing program at the next scheduled FOMS meeting of the December 14-15.
Powell said: “At this point, the economy is very strong and inflationary pressures are higher, so in my opinion it is appropriate to consider concluding the gradual reduction of our asset purchases, which we actually announced at the meeting of November, maybe a few months. ASAP. “The Fed chairman also ditched his long-held ‘inflation is transitory’ comment.
At the November FOMC meeting, the Fed decided to begin reducing its bond purchase program at a rate of $ 15 billion per month beginning in November. At this speed, the bond purchase program should have ended in June 2022 and the first hike in the benchmark interest rate since March 2020 is likely to occur in the second half of next year.
However, Powell’s latest statement has indicated that the first rate hike is likely to occur in the second quarter of 2022, as the central bank is expected to double its reduction amount to $ 30 per month starting in December. . Market participants currently expect three rate hikes of 25 basis points each in 2022.
A higher interest rate seems detrimental to growth stocks, such as those in the tech space, as a higher discount rate will lower the net present value of the investment in growth stocks. Growth stocks are expected to provide higher returns over a longer period. In addition, these companies depend on easy access to cheaper credit to grow their businesses.
However, the high-tech Nasdaq Composite is up 1.6% so far in December. The SPDR technology selection sector, one of 11 broad sectors in the market’s benchmark, the S&P 500 index, has advanced 2.7% so far this month.
Budget support to the semiconductor industry
The White House has lobbied Congress to swiftly pass legislation providing $ 52 billion over five years to help computer chip makers and alleviate shortages of vital components for many industries.
The government is concerned that the United States had a 37% share of global semiconductor and microelectronics production in 1990, which has dropped sharply to just 12% as of now. Consequently, American companies, especially the auto and high-tech industries, are suffering from an acute shortage of chipsets due to the collapse of the global supply chain during the pandemic.
Our best picks
We’ve narrowed our search to five large-cap semiconductor stocks (market cap> $ 25 billion) that have turned up in the last month in defiance of volatility. These stocks have strong growth potential for the remainder of 2021 and have seen positive revisions to earnings estimates over the past 60 days. Each of our picks has a rank of Zacks No. 1 (Strong Buy) or 2 (Buy). You can see Today’s full list of Zacks # 1 rank stocks here.
NVIDIA is benefiting from the coronavirus-induced wave of working from home and learning at home. NVIDIA is also benefiting from strong growth in GeForce desktop and notebook GPUs, which is boosting gaming revenue. Additionally, an increase in demand for Hyperscale continues to be a headwind for NVIDIA’s data center business.
The expansion of NVIDIA GeForce NOW is expected to boost its user base. Also, the strong acceptance of AI-based smart cockpit infotainment solutions is a boon. The collaboration with Daimler-owned Mercedes-Benz is expected to further strengthen NVIDIA’s footprint in autonomous vehicles and other automotive electronics spaces.
Zacks Rank # 2 NVDA has an expected earnings growth rate of 73.2% for the current year (ending January 2022). The Zacks Consensus Estimate for current year earnings has improved 4.6% over the past 30 days. NVIDIA’s stock price has advanced 8% in the last month.
IN Semiconductor you are seeing strengthening demand in most end markets as evident from your reserve trends over the past few quarters. ON Semiconductor continues to gain traction among electric vehicle manufacturers for products based on silicon carbide and insulated gate bipolar transistors.
ON Semiconductor has a well-diversified business that generates a significant percentage of revenues from each of the end markets for computing, consumer, industrial, communications, and automotive.
Zacks Rank # 1 ON Semiconductor has an expected earnings growth rate of over 100% for the current year. The Zacks Consensus Estimate for current year earnings has improved 12.5% over the past 60 days. ON Semiconductor’s stock price has risen 13% in the last month.
Qualcomm is well positioned to benefit from robust 5G traction with increased visibility to meet your long-term revenue goals. By calendar year 2021, 5G phones with Qualcomm chips are expected to experience 150% year-on-year growth at the midpoint to about 450-550 units.
Qualcomm has raised the bar for driverless cars with the launch of the first automotive platform of its kind, Snapdragon Ride, which enables automakers to transform their vehicles into autonomous cars using AI.
Zacks Rank # 2 QCOM has an expected earnings growth rate of 22.8% for the current year (ending September 2022). The Zacks Consensus Estimate for current year earnings has improved 1.5% over the past 30 days. QUALCOMM’s share price has risen 14.3% in the last month.
Lam research has a high exposure to the memory segment, which is likely to see tremendous growth in the coming years. The force is driven by cloud computing, big data, mobile devices, and the Internet of Things. Technological advancements in the areas of multiple patterns, 3D device architecture, and advanced packaging technologies are driving LAM.
Lam Research has benefited from the transition to the new data-driven economy, in which DRAM and NAND continually benefit from the growth in density. However, the uncertainty due to the coronavirus outbreak remains a cause for concern.
Zacks Rank # 2 LRCX has an expected earnings growth rate of 25.9% for the current year (ending June 2022). The Zacks Consensus Estimate for Current Year Profit has improved 2.5% over the past 60 days. Lam Research’s share price has risen 17.9% in the last month.
Xilinx designs and develops programmable devices and associated technologies around the world. Growing demand for Xilinx’s 16-nanometer UltraScale + family and the Zynq platform will likely continue to be the main driver of growth. Additionally, an increase in 5G rollout in multiple regions remains a catalyst.
The strong momentum from the Vitis software development platform should act as a tailwind for Xilinx. Additionally, the acquisition of Solarflare will generate incremental revenues in subsequent quarters.
Zacks Rank # 1 XLNX has an expected earnings growth rate of 33.1% for the current year (ending March 2022). The Zacks Consensus Estimate for current year earnings has improved 0.2% over the past seven days. Xilinx’s share price has appreciated 13.6% in the last month.
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Past performance is not a guarantee of future results. Inherent in any investment is the potential for loss. This material is provided for informational purposes only and nothing contained herein constitutes legal, tax, accounting, or investment advice, or a recommendation to buy, sell, or hold a security. No recommendation or advice is given as to whether any investment is suitable for a particular investor. It should not be assumed that investments in identified and described securities, companies, sectors or markets were or will be profitable. All information is current as of the date of this document and is subject to change without prior 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 value. These returns come from hypothetical portfolios consisting of Zacks = 1 rank stocks that were rebalanced monthly with no transaction costs. These are not the returns from actual portfolios of stocks. The S&P 500 is an unmanaged index. Please visit https://www.zacks.com/performance for information on the performance figures shown in this press release.
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Each was selected by a Zacks expert as the # 1 favorite stock to win + 100% or more in 2021. Previous recommendations have skyrocketed + 143.0%, + 175.9%, + 498.3%, and + 673.0%.
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QUALCOMM Incorporated (QCOM): Free Stock Analysis Report
Xilinx, Inc. (XLNX): Free Stock Analysis Report
NVIDIA Corporation (NVDA): Free Stock Analysis Report
Lam Research Corporation (LRCX): Free Stock Analysis Report
ON Semiconductor Corporation (ON): Free Stock Analysis Report
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