Top 5 Semiconductor Growth Stocks to Buy on Discount in 2022
After leading the market to new heights through the pandemic, semiconductor growth stocks are some of the most brutal hit in 2022. But, with many high-profile names down by over 40% from their highs, it might be time to start buying.
For example, Nvidia (Nasdaq: NVDA) gained close to 600% from its pandemic lows to reach an all-time high. Yet NVDA stock is down 44% since then.
With growing industry use for computer chips, demand is soaring. As a result, semiconductor revenue grew 26% in 2021. With this in mind, the market is expecting to pick up in the next few years with rapidly growing industries such as:
- Cloud
- Gaming
- Data Storage
- Autonomous Vehicles
- Internet of Things (IoT)
Computer chips also power critical infrastructure and medical equipment. Not to mention all the smartphones, laptops and tablets that run on them. And this only scratches the surface of what semis are useful for.
Given these points, the semiconductor industry expects to grow another 10% this year alone. Find out which semiconductor growth stocks look to benefit the most below.
Best Semiconductor Growth Stocks to Buy in 2022
Although the chip market crossed $500 billion in 2022, it’s still relatively small compared to other vital industries. At this point, computer chips are about as critical to society as oil, which is expecting to reach $5.8 trillion this year.
Without these vital pieces of tech, companies could lose billions. We are already seeing an example with the auto industry losing over $210 billion last year due to the chip shortage.
For this reason, it may be time to start looking for semiconductor growth stocks for the future. Here are some of the fastest-growing chip makers.
- Wolfspeed Inc (NYSE: WOLF)
- GlobalFoundries (Nasdaq: GFS)
- Advanced Micro Devices (Nasdaq: AMD)
- Top Semiconductor Growth Stocks No. 2
- Top Semiconductor Growth Stocks No. 1
Keep reading to discover why these growth stocks deserve a spot on your watchlist.
No. 5 Wolfspeed Inc
- EPS Growth YOY: 33%
- Price Target (% Upside): $128 (+24%)
Wolfspeed, formerly known as Cree until last year, is transforming its business to focus on the lucrative semi market. Following a four-year transition, Wolfspeed looks to become a global chip-making leader.
For one thing, the company is the largest silicon carbide (SIC) provider, arguably the most popular semiconductor choice for electronics. With this in mind, the chemical compound can withstand higher temperatures than other options. For this reason, EV automakers are turning to the compound to power electronics.
In fact, Wolfspeed today is announcing a new multi-year partnership with Lucid Motors (Nasdaq: LCID). Wolfspeed will provide its SIC solutions for the award-winning Lucid Air.
Although a major concern with Wolf stock has been its hefty price tag, the company’s transformation is starting to pay off. With several new partnerships under its belt, we should see sales accelerate.
No. 4 GlobalFoundries
- EPS Growth YOY: N/A
- Price Target (% Upside): $82 (+59%)
GlobalFoundries is the result of a manufacturing spinoff from AMD. The company started trading on the Nasdaq in November 2021 and has been making massive strides ever since.
Furthermore, the firm is the only pure-play foundry in the U.S. Department of Defense Foundry program. With this in mind, a foundry produces chips for other companies. In fact, GF already has an impressive list of partners, including Ford, Raytheon, AMD and more.
You can find GF’s chips in smartphones, cars, video game consoles, AI, etc. With branches worldwide, GF looks to be one of the top semiconductor growth stocks for several years to come.
No. 3 Advanced Micro Devices
- EPS Growth YOY: 77%
- Price Target (% Upside): $144 (+61%)
After racing over 350% during the pandemic, most investors know AMD by now, reaching over $164 a share. Now, AMD stock is down over 45% as it looks to gain support.
Best-known for its high-performance chips, AMD supplies to rapid growth industries. With this in mind, AMD has a massive addressable market with Data Centers ($35 billion), PCs ($32 billion) and Gaming ($12 billion).
Furthermore, AMD continues its dominant growth. AMD achieved record revenue (up 68% YOY) and free cash flow (up 314% YOY) in the fourth quarter.
Lastly, AMD will continue to be a force with a strong balance sheet and profit margins as these industries continue expanding.
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Is it a Good Time to Buy Semiconductor Growth Stocks?
If you have not noticed yet, semiconductor growth stocks lag the market significantly this year. For instance, the iShares Semiconductor ETF (Nasdaq: SOXX) is down 25% this year compared to the S&P 500 Index (SPX), down only 10%.
Are computer chips less valuable than they were a year ago? No, not necessarily. In fact, the pandemic accelerated the use of computer chips, and we are using them more today.
However, with the Federal Reserve swapping its pro-growth stance to fight surging inflation, investors sold off their semiconductor growth stocks. For one thing, higher interest rates discourage spending on expensive items, which often require computer chips.
At the same time, with new tech emerging daily, look for computer chips to remain in demand going forward.
