The world is supposed to have endless excitement about the future of computing, autonomous cars, smartphones, the Internet of Things and artificial intelligence and machine learning. Apparently, the excitement must be tempered sometimes when stock prices get too high.
Morgan Stanley’s Tuesday report on semiconductor chips and processors was rather positive on some companies. The firm also grew more cautious on others. Tuesday’s top analyst upgrades and downgrades captured some of the research report’s calls, but the reality is that many more companies in chip-world were noted.
Joseph Moore, the analyst behind the call, sees valuation concerns persisting in some of the top players that are driving the future of computing. Some of his targets were already very far behind the current prices, so investors may want to consider some of these target hikes more as house-cleaning calls. Still, the sector call included some key upgrades, and even some with the equivalent of Sell ratings.
While some of these look like valuation, Joseph is effectively moving his preferences into the chip stocks that are more likely to benefit from a broader economic recovery rather than remote-working trends.
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Remember that no single analyst call should ever be used as a sole decision to buy or sell shares in a company. Consensus estimates below are from Refinitiv. First, the top players mentioned in the call are listed, and then the rest have been ranked based on the formal ratings.
Advanced Micro Devices Inc. (NASDAQ: AMD | AMD Price Prediction) had been a favorite of the momentum players up until recently. AMD was maintained as Equal Weight but its price target was raised to $56 from $42 (versus a $54.68 prior close). Its consensus target price was $53.89.
Intel Corp. (NASDAQ: INTC) was downgraded to Equal Weight from Overweight with a $60 target price. Intel closed up 1.3% at $60.10 on Monday and was trading up two cents to $60.30 in late-morning trading. The prior consensus target price is $63.40.
Nvidia Corp. (NASDAQ: NVDA) was downgraded to Equal Weight from Overweight with a $380 price target (versus a $366.95 close). Joseph still likes the long-term story for Nvidia and sees large growth ahead, but he was no longer willing to keep the high-growth software valuations in reference to justify ever higher price targets. The 52-week trading range is $147.06 to $380.00, and the consensus price target is $385.12. Nvidia stock was last seen down about 3% at $354.91.
Qualcomm Inc. (NASDAQ: QCOM) was raised to Overweight from Equal Weight with a $102 target price. As noted by others, Qualcomm is believed to have the highest-end 5G chipsets. It had a $91.12 prior consensus target price. Shares closed Monday at $86.39, within a 52-week range of $58.00 to $96.17. Qualcomm stock was last seen up about 3% at $88.96 in Tuesday morning trading, with a consensus price target of $91.12.
Lam Research Corp. (NASDAQ: LRCX) was raised to Overweight from Equal Weight with a $334 price target. Shares closed Monday at $289.99, in a 52-week range of $174.43 to $344.32. The shares were recently trading up nearly 4% at $300.64, with a consensus price target of $304.43.
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NXP Semiconductors N.V. (NASDAQ: NXPI) was reiterated as Overweight and its price target was raised to $122 from $110. It closed Monday at $109.46, in a 52-week range of $58.41 to $139.59. The stock was last seen up about 3% at $113.25, with a consensus price target of $117.55.
Xilinx Inc. (NASDAQ: XLNX) was reiterated as Overweight and its price target was raised to $108 from $90. It closed Monday at $90.63 a share, in a 52-week range of $67.68 to $133.00. Xilinx stock recently traded up about 3% at $93.59, and its consensus price target was $95.90.
Equal Weight (as in Hold or Neutral elsewhere):
Micron Technology Inc. (NASDAQ: MU) was maintained as Equal Weight but its price target was raised to $63 from $52 (versus a $49.24 close). The consensus target price was $61.87 ahead of the call. Micron was up about 2.8% at $60.65 on Tuesday, with a 52-week range of $31.13 to $61.19.
Marvell Technology Ltd. (NASDAQ: MRVL) was maintained as Equal Weight, but Moore raised his target to $36 from $33.50. Shares closed Monday at $34.39, in a 52-week range of $16.45 to $36.92. Marvell stock traded relatively flat early Tuesday at $34.36. Its consensus analyst target is $34.43.
Applied Materials Inc. (NASDAQ: AMAT) was reiterated as Equal Weight but the price target was still raised to $60 from $42.50. It closed Monday at $57.05, within a 52-week range of $36.64 to $69.44. Applied Materials stock was last seen up about 3% at $58.72 in Tuesday’s session, and its consensus price target is $68.18.
Skyworks Solutions Inc. (NASDAQ: SWKS) was maintained as Equal Weight and its price target was raised to $124 from $90. The stock closed on Monday at $127.24. It has a 52-week range of $67.90 to $138.22, and the stock was last seen up about 1% at $128.71. The consensus price target is $117.65.
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Underweight (or Sell elsewhere):
Texas Instruments Inc. (NASDAQ: TXN) was maintained as Underweight but its price target was raised to $108 from $94 in the call. Its shares closed at $124.23 on Monday, and it was up another 1.8% at $126.50 on Tuesday with a strong market day. Texas Instruments has a 52-week range of $93.09 to $135.70, and its consensus price target was $119.68.
ON Semiconductor Corp. (NASDAQ: ON) was maintained as Underweight, but Moore raised his target to $14 from $12. Shares at $19.56 on Monday and were up 1.4% at $19.83 heading into Tuesday’s midday trading. They have a consensus target of $19.05 and a 52-week trading range of $8.17 to $25.92.
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