Recently, KeyBanc Capital Markets offered up some insight about chip stocks, naming a few companies as its “top ideas” for the year. This included a special nod to some major names, such as Nvidia (NASDAQ:NVDA), Qualcomm (NASDAQ:QCOM), and AMD (NASDAQ:AMD). Nevertheless, this didn’t do much to help share prices, as all three companies were down in Thursday afternoon’s trading.
KeyBanc revealed that the first half of the year wasn’t likely to look good for semiconductors and would likely feature continuing decline. However, the second half of 2023 was looking pretty good for chip stocks and would offer some recovery. KeyBanc analyst John Vinh revealed that four factors would mark 2023.
First, the Philadelphia Semiconductor Index already has a decline priced in. Second, long-term agreements are providing vital visibility to backlog levels. Third, prices should rise this year, giving chipmakers leverage, and finally, a range of growth drivers from data centers to automotive chips should give chipmakers plenty of customers to sell to. Vinh also noted that some markets would decline, particularly customer-facing retail markets like smartphones and PCs. But the rise of industrial markets should help lessen that blow.
Interestingly, analysts largely agree about all three of KeyBanc’s top ideas, calling each one a Moderate Buy. All three stocks have fairly similar upside potential, too. AMD stock has 22.28% upside potential thanks to its average price target of $83.03. Meanwhile, Nvidia stock has 20.16% upside potential with an average price target of $203.24.
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