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On Monday, Cantor Fitzgerald analysts provided their latest insights on the semiconductor and semiconductor equipment (semi/semi cap) industry, following the recent market turbulence after Liberation Day. They indicated that the potential implementation of tariffs could lead to a global recession, which would negatively impact the industry. This market sentiment is reflected in recent trading data, with many semiconductor stocks showing significant volatility. For deeper insights into the semiconductor sector’s market dynamics, InvestingPro offers comprehensive industry analysis and real-time metrics across 1,400+ US stocks.
The analysts highlighted the strong correlation between semiconductor stocks and GDP, noting the sector’s vulnerability to economic downturns. They pointed out that the Philadelphia Semiconductor Index (SOX) fell by 17% last week, suggesting further risks for semiconductor stocks if the economic situation worsens. However, they also acknowledged that any delay or deal in tariff implementation could significantly benefit the industry. This volatility is evident in individual stocks like Intel, which has seen a sharp 12.59% decline in the past week, according to InvestingPro data.
Despite the risks, Cantor Fitzgerald sees "real value" in semiconductor names after the selloff last week. They cautioned investors about owning semiconductor stocks in a recessionary environment but expressed confidence that the implementation of tariffs would indeed lead to a recession.
To navigate the uncertain landscape, Cantor Fitzgerald offered recommendations for both defensive and offensive investment strategies within the sector. For defense, they named Analog Devices (NASDAQ:ADI), Texas Instruments (NASDAQ:TXN), KLA Corporation (NASDAQ:KLAC), Intel Corporation (NASDAQ:INTC), NVIDIA Corporation (NASDAQ:NVDA), and Taiwan Semiconductor Manufacturing Company (NYSE:TSM). For those looking to play offense, they recommended NVIDIA (NASDAQ:NVDA), Broadcom Inc. (NASDAQ:AVGO), Micron Technology (NASDAQ:MU), Lam Research Corporation (NASDAQ:LRCX), and MKS Instruments (NASDAQ:MKSI).
Additionally, the analysts gave honorable mentions to Western Digital Corporation (NASDAQ:WDC), Seagate Technology (NASDAQ:STX), SanDisk Corporation (NASDAQ:SNDK), and Applied Materials (NASDAQ:AMAT) for their notably low valuations based on projected earnings and tangible book value.
In other recent news, Intel Corporation is in discussions with Taiwan Semiconductor Manufacturing Company (TSMC) to form a joint venture, where TSMC would acquire a 20% stake in Intel’s chipmaking operations. This proposed collaboration aims to enhance semiconductor manufacturing capabilities in the United States, involving other U.S. companies like Apple (NASDAQ:AAPL) and Nvidia. Analysts from UBS and TF International Securities have weighed in on the development, with UBS maintaining a Neutral rating on Intel with a $23 price target and TF International Securities’ Ming-Chi Kuo discussing TSMC’s potential role in improving Intel’s production yields. Meanwhile, BofA Securities also maintained a Neutral rating on Intel, with a $25 price target, following Intel’s Vision event in Las Vegas. The event highlighted a new leadership approach under CEO LipBu Tan, focusing on reshaping company culture and addressing competitive pressures in the industry. No significant new product or financial updates were announced at the event, but Intel’s strategic direction remains unchanged. The discussions around the joint venture and the company’s strategic plans are closely monitored by investors, given the potential impact on Intel’s future operations and competitive positioning.
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