7 chip stocks that are keeping the tech sector going

  • Nvidia (NVDA): Once a boutique GPU chipmaker, it’s now an industry juggernaut.
  • Advanced micro-systems (AMD): One of the pioneers of chip manufacturing, it is again one of the leading chip makers.
  • Phase (ENPH): A leading inverter company that is key to powering the solar market.
  • Monolithic power systems (MPWR): This provider of high-quality power solutions for industrial applications, telecommunications infrastructure and other critical sectors is well positioned.
  • ON Semiconductor (TO): Another chipmaker that focuses on power solutions for high-growth industries in the digital age.
  • Synaptics (syna): A leader in human interface semiconductor solutions.
  • United Microelectronics (CMU): A Taiwan-based semiconductor foundry company that supports many fabless chipmakers.

Source: Shutterstock

The tech sector has been battered for quite some time now. And chip stocks have been among the biggest victims. But that won’t last long.

While supply chain issues have hampered chip stocks and all remote working is changing demand dynamics for office equipment, some key sectors will continue to grow.

This is what we see in the actions we present here. Most of them will not benefit from the consumer-driven market, their customers are the companies that power electric vehicles, renewable energy, cloud computing, server farms and smart industry.

Most of them are behind-the-scenes tech players that only serious investors have heard of. Many have been knocked down by the transition in the investment climate. But it looks like the worst is over, which means significant upside potential.

There’s going to be some volatility, but it’s a good time to step into the water.

Teleprinter Company Current price
NVDA Nvidia $259.31
AMD Advanced micro-systems $106.82
ENPH Phase $211.23
MPWR Monolithic power systems $439.38
TO ON Semiconductor $55.70
syna Synaptics $180.98
CMU United Microelectronics $8.87

Nvidia (NVDA)

Nvidia (NASDAQ:NVDA) is definitely one of the leading chipmakers in the world right now. And it is also one of the best chip stocks in the world.

In early March, NVDA was hacked and there was great dismay that the hack was either China looking for a head start in chip design, or an attack from Russia. Other big tech companies have also been hacked and have banded together to find the culprit.

It now appears they are considering a 16-year-old from England as the culprit, and possibly a Brazilian as well. That’s a bit of a relief, although it’s also a wake-up call for NVDA. And he responded quickly.

Its main focus is graphics processing units (GPUs) that help visualize data. Its chips power crypto mining, server farms, the Internet of Things, telecommunications networks, and many other key sectors.

NVDA stock has gained 87% in the past 12 months, but is down almost 14% since the start of the year. It trades at a high premium, but that’s why it’s worth making withdrawals.

This stock has an A rating in my portfolio binder.

Advanced Micro Devices (AMD)

Advanced micro-systems (NASDAQ:AMD) was one of the companies that spun off from the original brain trust set up at Fairchild in the late 1950s and 1960s. This was when advanced transistors and integrated circuits were changing the possibilities of computing.

Launched in 1969, AMD has a unique pedigree. Originally a “lab to fab” company, it established its chip fabrication foundry and became a “fabless” chip maker in 21st Century. Many chipmakers are now fabless, meaning they design their chips and then contract with a foundry to produce them. This saves significant costs, but also has unique drawbacks, such as today’s supply chain challenges.

AMD’s long history has brought it to a point of ascendancy in this time. It is again a big chipmaker and one of the leading chip stocks with a very bright future.

AMD stock has gained 27% in the past 12 months, but is down 30% since the start of the year. That means you’re getting one of the best on sale.

This title has a B rating in my portfolio binder.

Enphase (ENPH)

Three years ago, Enphase Energy (NASDAQ:ENPH) was trading around $10 per share. Today it is trading around $200 per share. That’s about a 2,000% run at this time.

But unless you follow the renewable energy market, it’s probably not a company you’ve heard much about. Basically, energy from renewables is supplied as direct current (DC). To make it useful for homes, buildings, or the grid, it must be converted to alternating current (AC). This means that all of these renewable energy sources need an inverter.

This is what ENPH does. And as you can see from its growth, even during a major market transition, it’s been very successful.

This small company on the fringes of tech is today a major player in the global renewable energy sector. ENPH now sports a massive 202x price-to-earnings ratio, but that just reflects the growth potential that remains.

ENPH stock has gained 29% in the past 12 months, 11% since the start of the year. Note: This stock has a B rating in my portfolio binder.

Monolithic Power Systems (MPWR)

Granted, for most people, this is a pretty esoteric niche that no one really thinks about unless you’re an electrical engineer. But the uses of Monolithic power systems (NASDAQ:MPWR) systems work across a range of industries. They are the hidden force behind many systems we rely on every day. And as we continue to explore the digital age, its systems will be in even greater demand.

For example, if you’ve started to see EV charging stations popping up, chances are they’re built with an MPWR power bank. Or, if you have a newer car or truck, you probably have an infotainment dash. It’s powered by MPWR. The same goes for cameras and sensors.

The thing is, this “invisible” company is already well-positioned in some of the most important sectors. And as they grow, so will MPWR.

MPWR stock has gained almost 16% in the past 12 months, but has lost around 12% since the start of the year due to supply chain issues that have slowed auto supply. It won’t last long.

This title has a B rating in my portfolio binder.

ON Semiconductor (ON)

Similar to MPWR, ON Semiconductor (NASDAQ:TO) is a key player in power and sensor systems for the automotive and industrial sectors. As you know, the automotive sector is under pressure because it has been a victim of the supply chain crisis which is an ongoing problem.

There are also fears that China, one of the main countries for copper and nickel – along with Russia – not only has problems at its ports, but that rail shipments to Europe will no longer work because these rail lines cross Russia. Copper is a key component in wiring and motors.

But that doesn’t change the underlying fact that ON Semiconductor is a leading Fortune 500 company that is well positioned in the most important industries of the next decade.

ON stock has gained 24% over the past 12 months, but is down 23% since the start of the year and trades at a P/E of 26x. That’s far less than MPWR and other technology leaders.

This title has a B rating in my portfolio binder.

Synaptics (SYNA)

Do you use a fingerprint to access your phone or computer? Do you use voice commands in your car? If so, chances are you are using a Synaptics (NASDAQ:syna) product.

And with this type of human interface hardware becoming more commonplace for security and convenience, SYNA has a very secure future ahead of it. Remember that the first companies to adopt these interfaces will continue to use these interfaces and more and more companies will follow the leaders.

As this technology becomes more widely used, it is also likely that it will have more uses as well. We are already seeing some companies using fingerprint interfaces for house door locks. It could be the new car key soon too.

SYNA stock has gained 24% in the past 12 months, but has lost 40% since the start of the year due to the supply chain issue that is hampering the end products that make up a large part of its revenue .

This title has a B rating in my portfolio binder.

United Microelectronics (UMC)

After presenting all these chip stocks, it seems logical to have a foundry stock in the list. If it weren’t for the foundries, none of the great ideas from these companies would be worth anything.

United Microelectronics (NYSE:CMU) is a Taiwan-based chip foundry and has been in business since 1980, so it’s a veteran in the space.

Generally, foundries are considered more of a commodity in the chip industry, as they only produce chips designed by other companies. But it still takes a lot of technical knowledge to run a foundry these days, and UMC is one of the best in the business. It’s also a lesser-known Taiwanese foundry, which means it’s easier to grab it on sale when the other brands start rolling.

UMC stock has lost 2% in the past 12 months and 25% since the start of the year. On the upside, it trades at a P/E of 11x and its 2.4% dividend helps buy patience until the bullish momentum begins.

This title has a B rating in my portfolio binder.

As of the date of publication, Louis Navellier has positions in NVDA, AMD, ENPH, SYNA and UMC in this article. Louis Navellier has held (neither directly nor indirectly) any other position in the securities mentioned in this article.

The InvestorPlace research staff member primarily responsible for this article has not held (directly or indirectly) any position in the securities mentioned in this article.

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