Due to intensified global geo-political tensions, the semiconductor shortage issue might worsen. However, the overwhelming demand for semiconductors has helped the industry witness record sales and rising prices. John Neuffer, the president and CEO of Semiconductor Industry Association (SIA), recently said, “Demand for semiconductor production is projected to rise significantly in the years ahead, as chips become even more heavily embedded in the essential technologies of now and the future.”
Moreover, the passage of the CHIPS Act investments totaling $52 billion to strengthen domestic semiconductor manufacturing and research is predicted to boost the growth of the domestic semiconductor industry.
Given this backdrop, quality U.S. semiconductor stocks Intel Corporation (INTC), Micron Technology, Inc. (MU), ON Semiconductor Corporation (ON), Rambus Inc. (RMBS), and SMART Global Holdings, Inc. (SGH) could prove to be wise bets now.
Intel Corporation (INTC)
INTC engages in the design, manufacture, and sale of computer products and technologies worldwide. The company operates through CCG; DCG; IOTG; Mobileye; NSG; PSG; and All Other segments.
Click here to checkout our Semiconductor Industry Report for 2022
On February 15, 2022, INTC announced its acquisition of Tower for $53 per share in cash, representing a total enterprise value of approximately $5.4 billion. Pat Gelsinger, INTC’s CEO, said, "This deal will enable Intel to offer a compelling breadth of leading-edge nodes and differentiated specialty technologies on mature nodes – unlocking new opportunities for existing and future customers in an era of unprecedented demand for semiconductors."
INTC’s net revenue increased 2.8% year-over-year to $20.53 billion in the fourth quarter ended December 25, 2021. The company’s total current assets came in at $57.72 billion for the period ended December 25, 2021, compared to $47.25 billion for the period ended December 26, 2020. Also, its total assets came in at $168.41 billion, compared to $153.09 billion for the same period.
Analysts expect INTC’s revenue to increase 3.2% year-over-year to $77.82 billion in fiscal 2023. Its EPS is estimated to grow 6% to $3.72 in 2023. Also, it surpassed EPS estimates in each of the trailing four quarters. The stock closed Friday’s trading session at $48.07.
INTC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
INTC has an A grade for Value and a B grade for Quality. Within the A-rated Semiconductor & Wireless Chip industry, it is ranked #11 out of 97 stocks. Click here to see the additional POWR Ratings for Growth, Momentum, Sentiment, and Stability for INTC.
Micron Technology, Inc. (MU)
MU designs, manufactures, and sells memory and storage products worldwide. The company operates through four segments: Compute and Networking Business Unit; Mobile Business Unit; Storage Business Unit; and Embedded Business Unit.
On December 20, 2021, MU President and CEO Sanjay Mehrotra said, “We are now shipping our industry-leading DRAM and NAND technologies across major end markets, and we delivered new solutions to the data center, client, mobile, graphics, and automotive customers. As powerful secular trends including 5G, AI, and EV adoption fuel demand growth, our technology leadership and world-class execution position us to create significant shareholder value in fiscal 2022 and beyond.”
MU’s revenue came in at $7.69 billion for the fiscal 2022 first quarter ended December 2, 2021, up 33.2% year-over-year. Its non-GAAP net income came in at $2.47 billion, up 175.5% year-over-year, while its non-GAAP EPS came in at $2.16, up 176.9% year-over-year.
Analysts expect MU’s revenue to be $39.07 billion in fiscal 2023, representing a 20.8% year-over-year rise. The company’s EPS is also expected to increase 49.2% to $9.04 in 2022. It surpassed Street EPS estimates in each of the trailing four quarters. Over the past six months, the stock has gained 11% to close Friday’s trading session at $81.91.
MU’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to a Strong Buy in our POWR Ratings system.
It has a B grade for Growth, Value, Sentiment, and Quality. It is ranked #7 in the same industry. Click here to see the additional ratings for MU (Momentum and Stability).
ON Semiconductor Corporation (ON)
ON provides intelligent sensing and power solutions worldwide. The company operates through three segments: the Power Solutions Group; the Advanced Solutions Group; and the Intelligent Sensing Group.
On February 7, 2022, Hassane El-Khoury, president and CEO of ON, said, “We continue to expand gross margins as we shift our mix into these high-value strategic markets while ramping new products, rationalizing our manufacturing footprint, and improving our overall cost structure. Outlook for our business remains robust as evidenced by over 60% year-over-year growth in our design win funnel driven by our highly differentiated intelligent power and sensing portfolio.”
For the fiscal fourth quarter ended December 31, 2021, ON’s revenue came in at $1.85 billion, up 27.6% year-over-year. Its non-GAAP net income came in at $478 million, up 224.9% year-over-year, while its non-GAAP EPS came in at $1.09, up 211.4% year-over-year.
ON’s revenue is expected to come in at $7.65 billion in fiscal 2022, representing a 13.5% year-over-year rise. The company’s EPS is also expected to increase 41.7% year-over-year to $4.18 in 2022. In addition, it surpassed Street EPS estimates in each of the trailing four quarters. Over the past six months, the stock has gained 27.6% to close Friday’s trading session at $58.33.
It’s no surprise that ON has an overall B rating, which equates to a Buy in our proprietary rating system. In addition, it has an A grade for Growth and a B grade for Value.
ON is ranked #31 in the same industry. Click here to see the additional POWR Ratings for ON (Momentum, Stability, Sentiment, and Quality).
Rambus Inc. (RMBS)
Operating for more than three decades, RMBS provides chips and intellectual property (IP) that enable performance improvements for data centers and other markets. The company’s offerings include DDR5, DDR4, and DDR3 memory interface chips. Also, it offers a portfolio of physical interface and companion digital controllers through Northwest Logic, Inc.
On February 7, 2022, Luc Seraphin, CEO, RMBS, said, “Rambus delivered an outstanding fourth quarter contributing to an exceptionally good year, driven by excellent execution and record product revenue. The record cash generation fuels our ongoing strategic investment in scaling the business, returning value to stockholders, and extending our product roadmap to enable continued profitable growth.”
RMBS’ total revenue for the fiscal fourth quarter ended December 31, 2021, came in at $91.78 million, up 48.2% year-over-year. Also, its net income came in at $6.11 million, compared to a loss of $12.05 million in the prior period. Moreover, its EPS came in at $0.05, compared to a loss per share of $0.11 in the year-ago period.
Analysts expect RMBS’ revenue to increase 13.3% year-over-year to $513.40 million in fiscal 2022. Its EPS is expected to increase 8.4% per annum for the next five years. It surpassed the Street EPS estimates in each of the trailing four quarters. Over the past six months, the stock has gained 15% to close Friday’s trading session at $28.09.
It’s no surprise that RMBS has an overall B rating, which equates to a Buy in our proprietary rating system. In addition, it has an A grade for Growth and a B grade for Quality.
RMBS is ranked #36 in the same industry. In addition to the POWR Ratings I’ve just highlighted, we’ve also rated the stock for Value, Momentum, Stability, and Sentiment. Click here to get all the RMBS ratings.
SMART Global Holdings, Inc. (SGH)
SGH designs and manufactures specialty solutions for the computing, memory, and LED markets in the United States, Brazil, China, Europe, and internationally. It operates through Memory Solutions; Intelligent Platforms Solutions; and LED Solutions segments.
On January 4, 2022, CEO Mark Adams said, “We continued our strong momentum into the first quarter of fiscal 2022, achieving record revenue and non-GAAP gross margins while delivering non-GAAP earnings per share at the upper end of our EPS guidance range.”
SGH’s total net sales increased 61.1% year-over-year to $469.94 million in the fiscal 2022 first quarter ended November 26, 2021. Its non-GAAP net income came in at $56.31 million, up 186.9% year-over-year, while its non-GAAP EPS came in at $2.16, up 176.9% year-over-year.
SGH’s revenue is expected to increase 22.6% to $1.84 billion in 2022. Its EPS is expected to grow 36.1% per annum for the next five years. It surpassed EPS estimates in each of the trailing four quarters. Over the past six months, the stock has gained 12.4% to close Friday’s trading session at $26.91.
SGH has an A grade for Growth and Value. It is ranked #50 in the same industry. Click here to see the additional POWR Ratings for SGH (Momentum, Stability, Sentiment, and Quality).
INTC shares were trading at $47.93 per share on Monday afternoon, down $0.14 (-0.29%). Year-to-date, INTC has declined -6.22%, versus a -11.16% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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