The question that remains is where will the growth stay going forward, and which companies will be the leaders. The revised coverage is based primarily on a raised view for memory (DRAM) and wireless semiconductors, while the non-memory estimate for 2013 growth of +2.5% is more cautious.

What this means for investors is that UBS expects semiconductor sales growth to trough in this quarter and to peak by the first quarter of next year, still leaving some time for stocks to outperform. However, unless end-demand significantly improves, they believe we are at the stage in the cycle where investors have to become increasingly more selective. Their list of stocks to buy reinforces the selectivity angle.

Avago Technologies Ltd. (NASDAQ: AVGO) is a leading supplier for Apple Inc. (NASDAQ: AAPL) and has more than $1 billion of net cash on its balance sheet. The UBS price target for the stock is $42. The Thomson/First Call estimate is at $42 as well. Investors receive a 2.20% dividend.

Broadcom Corp. (NASDAQ: BRCM) is another big supplier to smartphone manufacturers. Broadcom supplies big clients like Apple with high-tech chips that integrate various functions, and it has recently attained several other major customers like Samsung and Nokia. The UBS target for the stock is $45. The consensus is at $40. Shareholders are paid a 1.20% dividend.

Linear Technology Corp. (NASDAQ: LLTC) reported third-quarter 2013 earnings that were in line with the consensus estimates. The weaker-than-expected revenue guidance may indicate limited growth prospects in several important markets, such as communications infrastructure and computing. UBS has a target for the stock of $40, while the consensus estimate is $35. Investors are paid a 2.70% dividend.

Maxim Integrated Products Inc. (NASDAQ: MXIM) is expanding its product portfolio to sensors, motion control and other areas of smartphones, tablets and hybrid devices, which will increase its dollar content per device. The UBS price objective for the stock is $37 and the consensus target is $36.05. Shareholders receive a 3.00% dividend.

Microchip Technology Inc. (NASDAQ: MCHP) is the sixth most shorted stock in the NASDAQ 100. Positive results could ignite a rally in the name. UBS has a $40 price target, and the consensus is at $40 also. Investors are paid a solid 3.80% dividend.

Micron Technology Inc. (NASDAQ: MU) is the second largest DRAM manufacturer in the world behind Samsung Electronics. The UBS target for this often volatile name is $12. The consensus is also at $12.

Nvidia Corp. (NASDAQ: NVDA) delivered a profit, beat Wall Street’s expectations and topped the revenue expectations. UBS has a $15.50 price target. The consensus is at $14. Investors are paid a 2.10% dividend.

Qualcom Inc. (NASDAQ: QCOM) has become a top holding for many portfolio managers around Wall Street. Former top Apple executive Jon Rubinstein recently joined the board of directors. The UBS target for this top name is $76. The consensus price objective is also at $76. Investors are paid a 2.20% dividend.

SanDisk Corp. (NASDAQ: SNDK) makes NAND chips through a joint venture with Japan’s Toshiba, which last Wednesday forecast a 34% increase in operating profit for this year, boosted by strong sales of flash memory chips. The UBS target for the stock is $65 and the consensus is at $65.50.

Silicon Laboratories Inc. (NASDAQ: SLAB) finishes up the list of top semiconductor stocks to buy. The company offers broad-based products, which include microcontrollers, clocks and oscillators, digital isolators and related products, touch controllers, proximity and ambient light sensors. The UBS target for the stock is $49. The consensus price objective is also $49.

One bonus for investors is many of the top stocks to buy are dividend-paying stocks, a reasonably new trait for technology stocks. Combining a solid dividend with the growth potential of semiconductor stocks could be a winning combination.

Within this slow but improving environment, the analysts believe investors should focus away from the already expensive high-quality, broad-based names that require a strong macro recovery to generate upside and move toward companies that offer specific growth drivers or those that can generate earnings leverage with minimal revenue upside. In a report released late yesterday, they highlighted their semiconductor stocks to buy.

Intel Corp. (NASDAQ: INTC) is the mega-cap name that tops the Deutsche Bank list. Now a virtual value stock, Intel wants a bigger piece of the mobile processor market. They recently released the Silvermont, a 22 nanometer system-on-chip that boasts three times the performance and five times less power consumption than current Atom core chips. The Thomson/First Call price target is $23. Shareholders are paid a solid 3.80% dividend.

Broadcom Corp. (NASDAQ: BRCM) stays high on the Deutsche Bank list of stocks to buy. While Broadcom has more than 70% share in the combo connectivity segment, they only have about 10% of the 3G baseband market and are looking to grow that number. The consensus price objective for the stock is $40. Investors are paid a 1.20% dividend.

Avago Technologies Ltd. (NASDAQ: AVGO) engages in the design, development and supply of analog semiconductor devices. The consensus target for this stock is $42. Investors receive a 2.40% dividend.

Freescale Semiconductor Ltd. (NYSE: FSL) sells its ARM-based semiconductors to a number of companies in the automotive, industrial and consumer device markets. The consensus price objective is $16.

NXP Semiconductors N.V. (NASDAQ: NXPI) just completed a 144-A, $750 million debt placement to help finance continued growth and to pay off existing floating rate debt. The consensus target for the stock is $36.

ON Semiconductor Corp. (NASDAQ: ONNN) is the top small cap name to buy at Deutsche Bank. Monday the company reported first-quarter 2013 earnings of $0.10 per share, topping estimates by 25%. The consensus price target for this top name is $10. Hitting the target would represent an almost 25% move from current trading levels.

Fairchild Semiconductor International Inc. (NYSE: FCS) is another company with chips for the automotive industry. The consensus estimate for the stock is at $17.

Monolithic Power Systems Inc. (NASDAQ: MPWR) rounds out the list of top semiconductor stocks to buy. MPS had an outstanding first quarter of the year, hitting record revenue while continuing to deliver solutions that meet or exceed industry standards. The consensus price objective for the stock is at $28.

Deutsche Bank points out in their research that from a risk perspective the semiconductor sector is inherently cyclical and therefore volatile as demand and inventory gyrations are always looming. With that caveat, picking the right names with growth potential for the future could add up to big portfolio gains.

Intel Corp. (NASDAQ: INTC) short interest fell 1% to 233.21 million shares. About 4.7% of Intel’s float is now short.

Advanced Micro Devices Inc. (NYSE: AMD) saw short interest fall by 6% to 96.06 million shares, or 15.9% of the company’s total float.

Qualcomm Inc. (NASDAQ: QCOM) short interest rose by 3.4% to 14.29 million shares, which represents 0.8% of the company’s float.

ARM Holdings PLC (NASDAQ: ARMH) saw a 5.9% rise in short interest to 3.46 million shares, which represents about 0.7% of the firm’s float.

Micron Technology Inc. (NASDAQ: MU) showed a decline of 22.4%% in short interest, to 66.32 million shares, or about 6.5% of Micron’s float.

SanDisk Corp. (NASDAQ: SNDK) saw short interest fall by 16.7% to 7.8 million shares, or 3.2% of the company’s float.

Short interest in Broadcom Corp. (NASDAQ: BRCM) rose by 1.5% to 7.46 million shares. That is 1.5% of the total float.

Marvell Technology Group Ltd. (NASDAQ: MRVL) posted a 2.4% increase in short interest, to 5.6 million shares, or about 1.4% of Marvell’s float.

Nvidia Corp. (NASDAQ: NVDA) short interest rose by 1.8% to 26.52 million shares, about 4.5% of the company’s float.

Texas Instruments Inc. (NASDAQ: TXN) saw short interest decline by 5.9% to 26.5 million shares, or 2.4% of the float.

Applied Materials Inc. (NASDAQ: AMAT) short interest rose by 1.8% to 18.95 million shares, which is about 1.6% of the company’s float.

The Market Vectors Semiconductor ETF (NYSEMKT: SMH) showed a drop of 3.8% in short interest to 9.34 million shares.

Shorts in Texas Instruments got squeezed by the company’s better-than-expected quarterly earnings report and the faint-hearted dropped their positions and likely went looking for a better play.

During the prior two-week period, short sellers added more than 15% to their positions in SanDisk. In the most recent report, more than 16% dropped their short in their short position in the stock. Their timing looks good; SanDisk hit a two-month bottom on May 1 and has been on the rise ever since.

Wells Fargo analyst David Wong wrote that the company debuted two more “FX” series microprocessors and that AMD has also made some changes to its processor pricing list. His current rating outperform and he has a price target range that is still in the $5 to $7 price range from when we asked “Dear Mr. Analyst, Can AMD Really Double?”

What is interesting is that the rise in the price of AMD stock is up 14% at $3.23 and the trading volume is about 4-times normal trading volume. The price cuts on the processors has garnered more news, perhaps in that the lower prices may actually boost demand.

Today’s boost gets AMD stock up to levels not seen since last October. There really does seem to be more of a move here from traders and investors playing a technical share price breakout versus a news trade spiking this stock higher.

Intel Corp. (NASDAQ: INTC) short interest fell 1.4% to 235.47 million shares. About 4.8% of Intel’s float is now short.

Advanced Micro Devices Inc. (NYSE: AMD) saw short interest rise by 10.6% to 102.23 million shares, or 16.9% of the company’s total float.

Qualcomm Inc. (NASDAQ: QCOM) short interest rose by 1.2% to 13.82 million shares, which represents 0.8% of the company’s float.

ARM Holdings PLC (NASDAQ: ARMH) saw an 8% decline in short interest to 3.27 million shares, which represents about 0.7% of the firm’s float.

Micron Technology Inc. (NASDAQ: MU) showed a rise of 9.9% in short interest, to 85.42 million shares, or about 8.4% of Micron’s float.

SanDisk Corp. (NASDAQ: SNDK) saw short interest rise by 15.5% to 9.36 million shares, or 3.9% of the company’s float.

Short interest in Broadcom Corp. (NASDAQ: BRCM) rose by 6.2% to 7.35 million shares. That is 1.4% of the total float.

Marvell Technology Group Ltd. (NASDAQ: MRVL) posted a 7.7% drop in short interest, to 5.26 million shares, or about 1.2% of Marvell’s float.

Nvidia Corp. (NASDAQ: NVDA) short interest rose by 1.8% to 26.52 million shares, about 4.5% of the company’s float.

Texas Instruments Inc. (NASDAQ: TXN) saw short interest increase by 23.2% to 28.17 million shares, or 2.6% of the float.

Applied Materials Inc. (NASDAQ: AMAT) short interest rose by 25.9% to 18.95 million shares, which is about 1.6% of the company’s float.

The Market Vectors Semiconductor ETF (NYSEMKT: SMH) showed a rise of 6.9% in short interest to 9.71 million shares.

Shorts piled back into Texas Instruments during this period, likely not expecting the stock to post a new high following its earnings report earlier this week.

A better short bet was Applied Materials. The maker of equipment used in chipmaking took a dive last week before recovering most of the loss this week. SanDisk’s swing was even larger in the past two weeks. Short interest in both these stocks should drop in the current two-week period.

We wanted to take a look at some of the bright spots in the earnings season so far, and these include Intel Corp. (NASDAQ: INTC), Microsoft Corp. (NASDAQ: MSFT), Verizon Communications Inc. (NYSE: VZ), Johnson & Johnson (NYSE: JNJ), Netflix Inc. (NASDAQ: NFLX), Google Inc. (NASDAQ: GOOG) and Peabody Energy Corp. (NYSE: BTU).

Intel Corp. (NASDAQ: INTC) and Microsoft Corp. (NASDAQ: MSFT), the Wintel duo, were not expected to show much in the first quarter. Fourth-quarter PC shipments were down and not expected to improve, while Microsoft’s Windows 8 operating system was generating some buzz, but not much in the way of sales. The two companies offered surprising, if not exciting results. Both companies’ share prices have remained above their pre-release levels even though both remain well within their 52-week ranges. One possible note of caution going forward is that the channels may be stuffed with product that is not moving and we won’t know that until next earnings season.

Verizon Communications Inc. (NYSE: VZ) seems to post a new 52-week high every day. Perhaps there is increasing optimism that the company will buy out Verizon Wireless partner Vodafone Group PLC (NASDAQ: VOD). That buyout would be immediately accretive to revenue and profit, but leave Verizon with a punishing debt load. This may be one of those situations where everything is fine until it’s not.

Johnson & Johnson (NYSE: JNJ), like Verizon, seems to make a new high every day. The company appears to have fixed its quality control issues and many of its most important lines of business are growing again. As we noted last week, we expect the 2.9% dividend yield to get a boost any day now.

Netflix Inc. (NASDAQ: NFLX) absolutely shattered expectations and the shares have been on a tear for the last couple of days, posting another 52-week high today of just under $220. Subscriber numbers were up and much of the credit is going to the company’s original production of “House of Cards.” Original programming is expensive and eats into the bottom line, but given the demands for licensing content from other media houses, Netflix’s original programming should carry it to more growth going forward.

Google Inc. (NASDAQ: GOOG) earnings beat estimates and were just a bit shy on the top line. Paid clicks were up 20%, but the amount the company received for each click fell by 4%. That’s still a net positive, however, and the plain fact is that web searching is massive, and Google simply owns search in much of the world. That’s not likely to change anytime — sooner or later.

Peabody Energy Co. (NYSE: BTU) did not post a profit in the first quarter but its loss was only a third as large at analysts had expected. Peabody and Arch Coal Inc. (NYSE: ACI), which reported in-line results this morning, both expect sales to improve as natural gas prices rise for the rest of this year. The entire coal mining sector could begin to see improvements based on these two miners’ results

We said at the beginning that we were going to cover bright spots so far this earnings season, but there is one storm cloud that deserves to be mentioned as well. As we’ve noted before, Caterpillar Inc. (NYSE: CAT) may be very bad news not just for the mining and heavy equipment sector, but for the whole mining group. The big miners have been struggling with rising costs and surging stockpiles. It could be several quarters before the mining sector sorts itself out.

The company’s net income of $362 million is 37% higher than last year’s net income of $265 million, and includes a tax benefit of $65 million as a result of the reinstatement of the federal research and development tax benefit earlier this year.

For the second quarter, TI expects revenue of $2.93 to $3.17 billion and EPS of $0.37 to $0.45. The consensus estimate calls for $3.04 billion in revenue and EPS of $0.38. For the full year, the consensus estimates call for $12.18 billion in revenue and EPS of $1.62.

TI expects second-quarter revenue related to its legacy wireless products to fall by about $60 million. The company had already announced the winding down of its legacy wireless business. TI plans to put more emphasis on the analog and embedded chip markets.

The company raised its annual dividend to $0.28, for a dividend yield of 3.3% and boosted its share buyback program by $5 billion in the first quarter.

Today’s report is not exciting, but it is stable. Shares won’t move much because the stock is fully valued and growth prospects are slim for the $40 billion chipmaker.

Shares are up about 0.6% at $35.00 in after-hours trading today. The 52-week range is $26.06 to $35.92. Prior to today’s release Thomson/Reuters had a consensus price target of around $34.70 on the company’s shares.

We would note to readers that SanDisk was included as one of eight stocks projected to beat earnings estimates just last week by the firm.

The first thing we would point out is that SanDisk shares are down 5% at $54.55 in very active pre-earnings trading at mid-day. Today’s call flies right in the face of real weakness in the stock. The market is also weak and the chip sector is weak as well.   BofA is saying that this indicates a mid to up-cycle earnings and the firm is targeting gross margins of 43% and operating margin of 23% along with $0.85 in earnings per share. The firm shows that the consensus estimates are 39% gross margin, 20% operating margin, $1.3 billion in sales, and $0.63 in GAAP earnings per share. The Thomson Reuters consensus shows a consensus of $0.77 EPS.

Today’s analyst call for real upside is due to average selling prices with spot NAND prices above seasonality. Chip supply constraints, low capital spending, and new demand were all cited for solid chip pricing momentum so far in 2013. The team said,

Our estimates are already above consensus but we see even further upside potential to our estimates and consequently, there could be upside risk to our price target of $66. Key data from first quarter results average selling price is the biggest swing factor determining quarterly earnings.” We would point out that the first quarter was also shown as being usually a low season compared to a fourth quarter peak. Perhaps even more important is that the firm pointed out that Samsung’s NAND capital spending increase will not be a big threat as Samsung may accelerate the ramp-up of its new China plant due to better NAND pricing.

While BofA Merrill Lynch may have some keen insight here, we would be quick to point out a couple of issues which support and also go against this upside call in SanDisk. This stock is highly volatile around earnings, and its stick price was only about $1 short of a 52-week high as recently as yesterday. This is also at a time when the stock price is at a 5-year high while other chip companies have been suffering.

The chart is trying to signal a breakout pattern, although the recent pullback might bring some question there. The drop in SanDisk is also on a day where the DJIA is down 1.2% or 169 points and the NASDAQ is down even more by 2.2% or 72 points.

Lastly, the consensus price target from Thomson Reuters on SanDisk’s stock is $58.78, while BofA’s $66 target compares to a street-high target of $70 on the stock. We would pay attention to SanDisk’s guidance more than the past earnings report because that is what has often generated the monumental buzz for traders in past years.

We also chose to look at how the Market Vectors Semiconductor ETF (NYSEMKT: SMH) has held up.

Intel Corp. (NASDAQ: INTC) short interest rose 2.1% to 238.76 million shares. About 4.8% of Intel’s float is now short.

Advanced Micro Devices Inc. (NYSE: AMD) saw short interest fall by 3.3% to 92.44 million shares, or 15.3% of the company’s total float.

Qualcomm Inc. (NASDAQ: QCOM) short interest declined by 8.2% to 13.66 million shares, which represents 0.8% of the company’s float.

ARM Holdings PLC (NASDAQ: ARMH) saw a 15.6% rise in short interest to 3.55 million shares, which represents about 0.8% of the firm’s float.

Micron Technology Inc. (NASDAQ: MU) showed a drop of 7% in short interest, to 77.7 million shares, or about 7.7% of Micron’s float.

SanDisk Corp. (NASDAQ: SNDK) saw short interest rise by 2.7% to 8.09 million shares, or 3.4% of the company’s float.

Short interest in Broadcom Corp. (NASDAQ: BRCM) fell by 14.5% to 6.93 million shares. That is 1.3% of the total float.

Marvell Technology Group Ltd. (NASDAQ: MRVL) posted a 7.7% drop in short interest, to 5.26 million shares, or about 1.2% of Marvell’s float.

Nvidia Corp. (NASDAQ: NVDA) short interest rose by 20.6% to 26.06 million shares, about 4.4% of the company’s float.

Texas Instruments Inc. (NASDAQ: TXN) saw short interest drop by 14.7% to 22.86 million shares, or 2.1% of the float.

Applied Materials Inc. (NASDAQ: AMAT) short interest dropped by 4.2% to 15.05 million shares, which is about 1.3% of the company’s float.

The Market Vectors Semiconductor ETF (NYSEMKT: SMH) showed a rise of 22% in short interest to 9.08 million shares.

The short bets in this two-week period seem to favor Nvidia and ARM, while appearing to lose interest in Texas Instruments and Broadcom. Qualcomm, the leader in mobile device chips, has strengthened its position in the sector and the short sellers are betting against these competitors. The recent reports that AMD will provide chips for the new Xbox should have an impact on the next short interest report.

The company announced:

Analog Devices Inc. (NASDAQ: ADI), with great sadness, announced today that Jerald G. Fishman passed away suddenly from an apparent heart attack yesterday evening. Mr. Fishman was 67 years old.

In accordance with the Company’s bylaws, ADI’s President Vincent Roche has been appointed Chief Executive Officer on an interim basis by ADI’s Board of Directors.

In the last reported quarter, revenue dropped 11% t0 $622 million. Net income fell slightly to $131 million. At the time Fishman said:

“Results for the first quarter were within the range we communicated and represented a generally weak macroeconomic environment exacerbated by year-end inventory reductions at many customers. Nevertheless, our operating performance remained strong, as we carefully managed our business to balance the long term opportunities for ADI with the realities of current market conditions. In January, order rates began to improve across most markets and geographies and have remained strong so far this quarter. As a result, we are planning for solid revenue growth in our second quarter, in the range of 4-8% sequentially with significant operating leverage.”