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3 Semiconductor Stocks to Buy for the Rise of Autonomous Vehicles

Published 09/15/2021, 12:49 PM
Updated 09/15/2021, 01:30 PM
© Reuters.  3 Semiconductor Stocks to Buy for the Rise of Autonomous Vehicles
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Because semiconductor chips play a crucial role in producing autonomous vehicles (AVs), we think growing demand for AVs should benefit fundamentally sound chip stocks Intel (INTC), ON Semiconductor (ON), and NXP Semiconductors (NASDAQ:NXPI). Let's discuss. The current global semiconductor shortage has impacted most industries, and the autonomous vehicles (AV) industry is no exception. However, governments worldwide have been implementing favorable policies to support the semiconductor industry, and companies have been ramping up production to meet the growing demand for chips.

AV-related technologies are far from being fully developed, but when they are they are expected to reduce crash injuries significantly. In addition, the COVID-19 pandemic highlighted the need for contactless self-driving technologies. According to a Precedence Research report, the global AV market is expected to grow at a 63.2% CAGR between 2021 - 2028. This should significantly increase the demand for semiconductors.

Investors’ interest in the semiconductor space is evidenced by the SPDR S&P Semiconductor ETF’s (XSD) 5.1% returns over the past month versus the SPDR S&P 500 ETF’s (SPY) 0.3% loss. Therefore, we think it could be wise to bet now on quality semiconductor stocks Intel Corporation (NASDAQ:INTC), ON Semiconductor Corporation (ON), and NXP Semiconductors N.V. (NXPI). These three stocks are well-positioned for handsome gains with the growing demand for EVs.

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