Seemingly for years, the semiconductor silo of the technology sector was outperforming and the top stocks continued to fly higher and higher. Even this year, while the group is the leading technology subsector with a gain of 11%, it has underperformed the S&P 500 by 8% over the past month. After some of the top companies, including in semiconductor testing and memory, presented very good earnings results, almost every one of the top stocks saw selling.
While most investors are familiar with the “buy the rumor, sell the news” adage, many analysts are getting very constructive on the semiconductors, memory and semiconductor capital equipment hybrids at current trading levels. While supply constraints have weighed heavily, and could be one of the reasons for the selling after solid results, the reality is that probably will not last forever.
We noticed the selling in companies reporting good results, so we screened the BofA Securities technology coverage universe looking for Buy-rated stocks offering great entry points. We found four that aggressive investors should be looking to buy after they posted stellar numbers and were sold off. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
This top semiconductor company has been on fire and crushed expectations. Advanced Micro Devices Inc. (NYSE: AMD) operates as a semiconductor company worldwide. Its products include x86 microprocessors as an accelerated processing unit, chipsets, discrete and integrated graphics processing units (GPUs), data center and professional GPUs, and development services. They also include server and embedded processors, and semi-custom system-on-chip products, development services and technology for game consoles.
AMD provides x86 microprocessors for personal computers under the AMD Ryzen, AMD Ryzen PRO, Ryzen, Threadripper, AMD A-Series, AMD FX, AMD Athlon, AMD Athlon PRO and AMD Pro A-Series processors brands. It provides microprocessors for notebook and 2-in-1s under the AMD Ryzen, AMD A-Series, AMD Athlon, AMD Ryzen PRO, AMD Athlon PRO and AMD Pro A-Series processors brands, as well as microprocessors for servers under the AMD EPYC and AMD Opteron brands. Its chipsets are sold under the AMD trademark.
The company reported outstanding results, with data center revenue doubling. The BofA Securities analyst said this:
Solid beat and raise with calendar 2021 sales growth now 50% year-over-year (vs. 37% prior); We reiterate our buy rating and raise the price objective with a path to long-term earnings-per-share of $4+. Like: improving supply; product cycles (Milan, Ryzen 5000, consoles, Radeon 6000); 1.3% to 4% of market share gains in first quarter 2021 estimated. Risks: tough PC compares post double-digit growth in 2020/21 estimated; growing competition from Intel (new CEO) and Arm based CPUs.
The BofA Securities raised its price target to $110 from $100. The Wall Street consensus target is $105.41. The final trade Advanced Micro Devices stock for Friday came in at $81.62 a share.