From NVDA to AMD: Top semiconductor stocks to watch in March

Highlights

• NVIDIA Corporation (NASDAQ:NVDA) has a P/E ratio of 62.86 and a dividend yield of 0.07%.

• Advanced Micro Devices, Inc. (NASDAQ:AMD) completed the acquisition of Xilinx in February in an all-stock transaction. AMD’s P/E ratio is 46.57.

• GlobalFoundries Inc. (NASDAQ:GFS) debuted in NASDAQ on October 28, 2021. The company has clients like AMD, Ford, BMW, etc. Its forward P/E for one year is 37.52.

The semiconductor industry has been facing several challenges lately. After the pandemic interruptions, the Russia-Ukraine war may cause raw material supply disruptions.

Russia and Ukraine supply metals like palladium, and gases like neon are critical to the semiconductor industry. They are used in making silicon wafers for various devices.

Palladium is an alternative to the costly gold plating in semiconductors because of its high malleability and conductivity.

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The industry had also suffered disruptions during the Russian invasion of Crimea in 2014 when global sanctions were levied on Russia. However, this time, the industry is struggling to meet the demand amid high raw material costs. In the US, the government has asked chipmakers to diversify their supply chains to reduce dependency on other countries.

Here we discuss the top five semiconductor stocks worth exploring in March.

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NVIDIA Corporation (NASDAQ:NVDA)

Market Cap: US$604 billion

Closing price on February 28, 2022: US$243.85

Nvidia designs graphics processing units (GPUs) for different end markets. Its distinct graphics processing units enhance the computing experience in end markets like data centers, gaming, and automotive infotainment systems. The company is based in Santa Clara, California. 

On March 1, 2022, the company suffered a cyber-attack. However, it ruled out any major business disruption. Hackers leaked the company’s employees and proprietary information. 

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For the fiscal year ended January 31, 2022, it reported a record revenue of US$26.91 billion, up 61% from the previous year’s revenue of US$16.68 billion.  

The net income more than doubled to US$9.75 billion or US$3.85 per share diluted compared to US$4.33 billion or US$1.73 per share diluted in FY2020.

It now expects revenue to be US$8.10 billion, plus or minus 2%, in the FY2023. The GAAP and gross margins are expected to be 65.2%, with a plus or minus 50 basis points.

Its stock traded between US$346.47 and US$115.67 in the last 52 weeks. NVDA has a P/E ratio of 62.86 and a dividend yield of 0.07%. The annualized dividend stands at US$0.16.  

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Advanced Micro Devices, Inc. (NASDAQ:AMD)

Market Cap: US$195.5 billion

Closing price on February 28, 2022: US$123.34

Advanced Micro Devices is a semiconductor company with more than 50 years in existence. This Santa Clara, California-based company deals with high-performance computing, graphics, and visualization technologies. 

On February 14, it completed the acquisition of Xilinx in an all-stock transaction.

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The technology company earned US$16.4 billion in revenue in the fiscal year ended December 25, 2021, up 68% increase YoY.  

Its net income grew 27% to US$3.16 billion in fiscal 2021 compared to US$2.49 billion in FY 2020. The EPS diluted came in at US$2.57 versus US$2.06 per share diluted in fiscal 2020.

For the full year 2022, AMD expects the revenue to be approximately US$21.5 billion, estimating growth across all businesses.

Its stock moved in the range of US$164.46 to US$72.50 in the last 52 weeks. AMD has a P/E ratio of 46.57 and a forward P/E for one year of 33.25. 

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Marvell Technology, Inc. (NASDAQ:MRVL)

Market Cap: US$55 billion

Closing price on February 28, 2022: US$68.33

Marvell Technology is the fabless chipmaker headquartered in Wilmington, Delaware. It is focused on networking and storage applications and serves data centers, enterprises, automotive, and consumer end markets.

It will announce its fourth-quarter and full-year results on March 3, 2022. 

For the third quarter ended October 30, 2021, it posted net revenue of US$1.21 billion compared to the previous year’s US$0.750 billion. The net loss grew to US$62.53 million or US$0.08 per share diluted in Q3, 2021, compared to US$22.9 million or US$0.03 per share diluted in the same period the previous year.  

Its stock traded between US$93.85 and US$37.92 in the last 52 weeks. MRVL’s forward P/E ratio is 69.02, and the dividend yield is 0.25%. The annualized dividend stands at US$0.24. 

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GlobalFoundries Inc. (NASDAQ:GFS)

Market Cap: US$30.7 billion

Closing price on February 28, 2022: US$60.78 

Malta, New York-based Global Foundries Inc. is a semiconductor foundry. It manufactures complex integrated chips for electronic devices. Its revenue primarily comes from selling semiconductor wafers for customers’ proprietary integrated circuit designs.

In 2021, it signed 30 long-term agreements with clients like AMD, Ford, BMW, etc., to supply and collaborate semiconductor manufacturing. It debuted in NASDAQ on October 28, 2021. 

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In fiscal 2021, its revenue increased by 36% YoY to US$6.58 billion compared to US$4.85 billion in FY2020. The net loss decreased to US$254 million or US$0.50 per diluted share compared to the net loss of US$1,350 million or US$2.70 per diluted share in the previous fiscal year. 

Its stock traded between US$73.25 and US$43.59 in one year. The GFS stock has a forward P/E for one year of 37.52. 

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Source: Pixabay

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ON Semiconductor Corporation (NASDAQ:ON)

Market Cap: US$26.02 billion

Closing price on February 28, 2022: US$62.61

On Semiconductor is a leading supplier of sensors and analog semiconductors. It is the second-largest supplier of discrete transistors like insulated gate bipolar transistors and metal oxide semiconductor field-effect transistors globally. The company is based in Phoenix, Arizona.

The technology company reported a fiscal 2021 revenue of US$6.74 billion, a 28.3% increase over the previous year. The net income attributable to the company increased to US$1.01 billion or US$2.27 per diluted share compared to US$0.234 billion or US$0.56 per diluted share in the fiscal year 2020.

Its stock traded in the price range of US$71.25 to US$34.01 in the last 52 weeks. It has a P/E ratio of 26.39 and a forward P/E for one year of 15.05. 

Bottomline

The S&P MidCap 400 Semiconductors & Semiconductor Equipment Industry Group Index declined around 4.6% in one year. With the rising cost of semiconductor production, prices of almost all electronic devices have been rising. Investors, however, should carefully analyze the companies before investing in the stock market.