Investors who waited patiently for years holding semiconductor stocks are getting rewarded. Many of the big cap names are trading at yearly highs. One risk remains: the new highs reflect a bet that the U.S. and China will not add any new tariffs to each other’s imports.
Applied Materials (NASDAQ:AMAT) closed near 52-week highs last week but sports a P/E in the 17 times range. Micron (NASDAQ:MU) enjoys a market cap close to that of AMAT stock, at over $50 billion, after closing at $50.50 last week. Yet growth investors cannot afford to miss out on holding chip stocks, especially if U.S.-China trade tensions ease.
For the last year, technology firms delayed or slowed spending on expectations demand would slow due to tariffs. Even though those taxes are now in place, suppliers know how much market demand will drive sales higher for the rest of the year. So, stocks like Lam Research (NASDAQ:LRCX) are at yearly highs. Even Nvidia (NASDAQ:NVDA) gained ~25% in the last quarter, despite consistently weaker year-on-year results.
Your Takeaway
The growing demand for more computational power, storage, and memory slowed in recent quarters but is set to recover. AI, autonomous driving, cloud computing, and a refresh in devices like the smartphone will usher a rebound in semiconductor demand.
