Yesterday we wrote about how attractive Micron (NASDAQ:MU) is looking as we close out 2021, with the likes of Mizuho and Citi both calling it a top pick for the coming year. But they’re certainly not alone in attractive semiconductor names, and as was pointed out by the latter, “business conditions for the industry haven’t been this attractive since 2000”. Indeed, the major iShares Semiconductor ETF (NASDAQ:SOXX), broke out of its range in October and has been powering to new highs since.
Micron is one of the ETF’s biggest holdings, and with that in mind, let’s take a look at two of its closest peers also in the top 10 holdings and see why they’re potentially worthy additions to your 2022 portfolio.
1. Advanced Micro Devices
After a sluggish start to the year which saw shares drop as much as 25% through May before they turned around, Advanced Micro Devices (NASDAQ:AMD) are looking set to close out 2021 on a high. They have tailwinds in the form of external industry factors, as well as an incredible internal revenue engine.
Their Q3 earnings had top-line revenue up 54% year on year which was well ahead of the consensus, as was their bottom line earnings per share. In addition to smashing analyst expectations, management also upped their forward guidance for the current quarter, one of the most bullish signals they can give to investors. We’ll know next month if they were right to do so, but for now, the price action certainly suggests that they were.
The team over at Rosenblatt named AMD, alongside Micron, a “top pick” for 2022 last week, and believe we’re on the verge of what will become "the biggest semiconductor cycle of all time" based on factors such as the growth of artificial intelligence. Bank of America were also out with bullish comments on AMD this month, with analyst Vivek Arya noting that AMD is likely to continue to take “market share from Intel (NASDAQ:INTC) in both the PC and server spaces until Intel can effectively execute on its roadmap and strategies.”
With shares only about 5% off their all time highs and all this positive forward momentum showing no signs of slowing down, there’s every reason to think AMD will continue rallying into the new year.
Nvidia
Like AMD, shares of Nvidia (NASDAQ:NVDA) had a sluggish start to the year but have done little else but rally since the summer. They’re up almost 130% since May and with their shares on the verge of confirming a bullish MACD crossover, it looks like they’re keen to push on even further.
Like AMD, they too grew their most recent Q3 revenues by more than 50% year on year and crushed analyst expectations across the board. As recently as last week, UBS analyst Timothy Arcuri reiterated their Buy rating on Nvidia stock and noted that Nvidia is likely to benefit as it builds more "stable" revenue sources around its GPU and software moats.
Bank of America echoed these comments on the back of an investor sentiment survey, noting that Nvidia is one of the top semiconductor stocks investors are “long.” Wedbush’s Dan Ives joined the bull camp earlier this month when he spoke about the “fourth industrial revolution” of which Nvidia is among the leaders. At the same time however, it’s worth noting that some like Gene Munster of Loup Ventures are urging caution on the tech space in general and the likes of Nvidia in particular. He put a bit of a damper on the Christmas spirit on Monday when he warned that “investors in Big Tech should enter 2022 with a healthy dose of caution.”
He sees a big correction among tech names in the first quarter of 2022, with high valuation stocks set to be hurt the most. He specifically added Nvidia to that bucket, but hedged his call by saying that over the long term, he was still a “big believer in Big Tech.” And this is what’s important to those of us getting involved. Rather than trying to scalp in and out for a quick buck, we’re looking at some top performers here from a top-performing industry that has a lot of roads ahead of it.
