When Intel announced last week higher-than-expected revenue and earnings for the quarter and for the full year, primarily because of improving PC sales, stocks that benefited from those sales also jumped. Intel supplies computer chips, so the companies that make the gear that makes those chips for Intel and other top companies may also see a surge in business. In a new research report, the Semiconductor Equipment analysts at UBS opine that semiconductor wafers could be seeing a large seasonal increase in demand.
The UBS channel checks found 300 millimeter (mm) semi wafer demand from all of Taiwan was around 1.2 million wafers in May, continuing a strong recovery over the past two months. Their research shows that over the past 12 years, Taiwan semi wafer demand in the June quarter has tracked up 29% quarter-to-quarter on average and up 21% year-over-year for the month of June on improving fab utilization rates.
Given this good news, UBS highlights two top stocks to buy to capitalize on the current business surge. We also cover the other top names in the chip manufacturing sector.
Applied Materials Inc. (NASDAQ: AMAT) has long been the powerhouse name in chip capital equipment. The company is ramping up its efforts to be a bigger player in the NAND sector. For Applied Materials, where its share has been low, this new architecture throws open a new opportunity. Investors are paid a 1.8% dividend. The Thomson/First Call price target is $21.68. Shares closed Friday at $22.37.
ASML Holding N.V. (NASDAQ: ASML) engages in designing, manufacturing, marketing and servicing semiconductor processing equipment used in the fabrication of integrated circuits or chips worldwide. It provides PAS 5500 family products that comprise wafer steppers, and step and scan systems suitable for the i-line, krypton fluoride and argon fluoride processing of wafers. The company returned to earnings per share growth in the December quarter, after eight quarters of decline, clearly on the rebound. Investors are paid a small 0.8% dividend. The consensus price target for this top industry name is $90.35. The stock closed Friday at $89.38.