Amkor Technology shares surged on Tuesday after a Wall Street analyst said the company is an "underappreciated" play on efforts to bring semiconductor manufacturing back to the U.S. Amkor stock rose more than 7% on the news.
Needham analyst Charles Shi launched coverage of Amkor stock with a buy rating and a price target of 40.
On the stock market today, Amkor stock popped 7.7% to close at 33.75.
As the only U.S.-headquartered, major outsourced semiconductor assembly and test, or OSAT, provider, Amkor "should benefit from the current geopolitical environment," Shi said in a client note. He said Amkor stock is an "underappreciated semiconductor reshoring and AI story."
"Importantly, the company has seen market-shaping customers, such as Apple, moving orders its way as they de-risk their Asian supply chains," he said.
Amkor Stock Is 'Hidden Gem'
Companies located in Taiwan, China, and Southeast Asia largely dominate OSAT services today.
Amkor should be in focus as the U.S. Commerce Department awards grants and loans to chipmakers to build new factories stateside, Shi said. So far, the Commerce Department has made awards to GlobalFoundries, Intel and Taiwan Semiconductor Manufacturing under the 2022 Chips and Science Act. More funding awards are in the works.
Amkor also is benefiting from its advanced packaging required to assemble artificial intelligence processors, Shi said.
"As investors scramble to find AI stories, we see Amkor as a hidden gem deserving of consideration," he said.
Weakness in the company's historic core markets of automotive and industrial chipmaking has weighed on Amkor stock in the last year. But Shi believes a cyclical upturn is fast approaching and the first half of 2024 should mark the trough for Amkor's business.
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