Will semiconductor stocks rebound in Q4 and Q1? Nvidia Corp is ranked first choice by Bank of America
TechNews Financial News
August 13, 2024
Author MoneyDJ
August 13, 2024
Author MoneyDJ
Nvidia Corp. jumped higher after being named by BofA as its top pick as semiconductor stocks rebound in the fourth quarter.
MarketWatch and Yahoo Finance reported that Bank of America analyst Vivek Arya issued a research report on the 12th stating that semiconductor stocks are expected to generally rebound when seasonal headwinds weaken in Q4 this year (2024), and Nvidia Corp will be one of the top picks by then.
Arya said that everyone is waiting for Nvidia Corp's financial report scheduled to be released on August 28, but September has always been the worst month of the year for the Philadelphia Semiconductor Index, so investors may be more patient.
The good news is that the fourth and first quarters are going to be much better for semiconductor stocks, which has Arya hoping that the stocks will rebound. In this situation, Nvidia Corp, Broadcom Inc., and wafer inspection equipment manufacturer KLA Corp. are Arya's first choices, because these companies are the most profitable manufacturers in their end markets.
Arya also mentioned that the current upward cycle of the semiconductor industry has continued for the fourth quarter, and the semiconductor industry has also increased by 28%. However, from a historical perspective, the semiconductor upward cycle lasts for ten quarters on average, driving semi-conductor prices to rise 67% during the period.
Although investors have begun to question whether companies' heavy investment in AI will pay off, Arya believes that although these doubts are valid, it is still too early to worry and there is no conclusion yet.
Arya pointed out that cloud providers investing in AI can not only protect themselves (to defend their dominance in search, social or e-commerce), but also develop new revenue sources. Not only that, companies and sovereign states have just begun to introduce AI, and Nvidia Corp’s Blackwell chips, which are “best suited to perform AI tasks,” have not yet been shipped.
Arya believes that it will take at least until 2026 before large cloud providers will admit that the return on investment in AI is low.
Nvidia Corp jumped 4.08% at the end of the day on the 12th to close at $109.02, setting a new closing high since August 1. Nvidia Corp's AI server and storage technology partner Super Micro Computer simultaneously rose 6.33% to close at US$540.98.
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