These Chip Stocks Could Gain 40% This Year And Outperform The S&P 500

Fabless chip stocks are showing strong price performance as they enter the elite IBD 50 list. Rising interest rates aren’t good news for these specialized semiconductor designers but demand is growing rapidly for automotive, health care and telecom applications. China’s reopening economy could also prove to be a tailwind after steep 2022 losses.


So have shares already bottomed? If so, JP Morgan reports that chip stocks typically rise 40% one year after entering a new uptrend.

Lattice Semiconductor (LSCC) makes programmable logic devices for designers in the telecom, computing, industrial, 5G and other applications. Mutual funds own 72% of shares.

Shares broke out of a cup-with-handle base with a buy point of 76.57 and are now extended.

Lattice has strong 98 Composite and 96 Relative Strength ratings. The perfect 99 Earnings Per Share Rating reflects strong earnings growth over the past eight quarters. Q4 sales of $176 million grew 24% year over year while earnings rose 53% to 49 cents per share.

Rambus (RMBS) designs chips and IPs to make memory and processing faster, more reliable and smoother. Shares broke out of a cup base at 33.85 in November and carved a flat base that set off an alternate entry in January when the stock rallied above 39.44. The 98 Composite and 97 Relative Strength ratings are bullish but earnings growth has slowed over the past two quarters. Q4 sales grew 33% to $122.4 million but earnings of 14 cents per share showed a 22% decline.

Monolithic Power (MPWR) makes analog and mixed signal ICs to improve high performance power applications in the automotive, telecom, cloud and industrial sectors. Mutual funds own 70% of shares.

MPWR stock is in a cup base with a 541.49 entry, boasting impressive growth numbers earning the chipmaker a perfect 99 EPS Rating. Q4 sales grew 37% to $460 million while earnings of $3.17 per share surged 50% year over year. This growth stock also boasts strong 98 Composite and 90 Relative Strength ratings.

Chip Stock Surges After IPO

Recent IPO chip stock Mobileye (MBLY) develops technology for autonomous and self-driving vehicles. Fund ownership is a staggering 83%. Shares rebounded from their 50-day line in January and remain above, but have yet to build a base.

This newly-public company is showing early promise, with rising earnings and sales over the past three quarters. Q4 sales at the Intel (INTC) spinoff grew 59% to $565 million while earnings of 27 cents per share rose a whopping 125% year over year. Near-ideal scores of 97 for the Composite and Relative Strength ratings highlight the stock’s technical strength.

Broadcom (AVGO) designs analog ICs for telecom, industrial and auto companies.

This chip stock is approaching a buy point of 677.86 in a long consolidation.

AVGO stock holds strong 97 Composite and 83 Relative Strength ratings. A stellar record of earnings and sales growth has earned this chip stock a lofty 95 EPS Rating.

Q4 sales grew 27% year over year to $8.9 billion while earnings surged 34% to $10.45 per share.

Please follow VRamakrishnan @IBD_VRamakrishnan for more news on growth stocks.


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