Nvidia Stock Among Top Picks For Semiconductor Stocks In 2021

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The uptrend in the semiconductor cycle is just getting started, according to investment bank Evercore ISI. On Monday, the firm named seven semiconductor stocks as “top picks” for 2021, including Nvidia stock.


“Despite another year of outperformance in 2020, we think the (semiconductor) cycle is just getting started,” Evercore ISI analyst C.J. Muse said in a note to clients. Muse forecasts an uptrend of six to eight quarters.

“With every industry vertical increasingly focused on digitalization combined with key product cycles including 5G smartphones, AI/ML (artificial intelligence and machine learning), a broad-based recovery in auto/industrial (markets) as well as expected continued strength in PCs and a recovery in networking infrastructure/enterprise, our base case calls for semi revenues to grow 14% in 2021 to $500 billion,” Muse said.

In his “2021 Annual Outlook” report, Muse selected four chipmakers and three equipment suppliers as top picks in the sector. They include chipmakers Nvidia (NVDA), Analog Devices (ADI), Micron Technology (MU) and Qualcomm (QCOM). Among chip-gear makers, he likes ASML (ASML), Applied Materials (AMAT) and Teradyne (TER).

Nvidia Stock Scores Price-Target Hike

Muse reiterated his outperform rating on Nvidia stock and raised his price target to 675 from 600.

In morning trading on the stock market today, Nvidia stock rose 2%, near 531.

Nvidia stock currently ranks ninth on the IBD 50 list of top-performing growth stocks. Other semiconductor stocks on the list include Applied Materials and Teradyne.

Nvidia stock is one of three semiconductor stocks on IBD’s prestigious Leaderboard watchlist.

Muse said Nvidia stock offers “best-in-class exposure to secular growth opportunities” in artificial intelligence, gaming and autonomous driving.

Other Analyst Picks For Semiconductor Stocks

Elsewhere on Wall Street, Jefferies analyst Mark Lipacis also named Nvidia stock as a top pick in semiconductor stocks. He cited its leadership in parallel processing technology.

His other top picks include Analog Devices, Advanced Micro Devices (AMD), Microchip Technology (MCHP), NXP Semiconductors (NXPI), ON Semiconductor (ON) and Tower Semiconductor (TSEM).

Meanwhile, Morgan Stanley believes the recovery in the chip sector is priced into most semiconductor stocks. The firm’s semiconductor analysts see the most value now in memory-chip stocks Micron and Western Digital (WDC). They see the most compelling growth opportunities in Qualcomm, Teradyne and Sensata Technologies (ST).

Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.


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