This stock could be biggest winner as 'fundamental bottom' nears for chips, analyst says
Nvidia Corp. leads top picks for semiconductor stocks heading into 2023 for one noted analyst Thursday
After a semiconductor shortage flipped into a glut in 2022, chip stocks are headed for a strong entry point and will lead the broader market in the new year, with Nvidia Corp. the best pick among them, an analyst wrote Thursday.
Evercore ISI analyst C.J. Muse said he expects the beleaguered chip sector to turn around with a soft landing, having bottomed out in mid-October, when the SOX index hit 2,162, its lowest level since mid-September 2020. A “fundamental bottom,” however, should play out over the next three to six months, he wrote, “with a clear path to soft-landing in sight and 1-2 more cuts.”
Muse said historically, the best time to selectively buy into the SOX index is about two months before that fundamental bottom. Muse wrote that his top pick for 2023 was graphics-chip maker Nvidia
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Semiconductor stocks, however, lagged behind the broader market on a rough day Thursday, as the PHLX Semiconductor Index
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Year to date, the SOX index is down 32.6%, while the S&P 500 is down 18.3% and the Nasdaq is off 30.9%.
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Chip stocks are under-owned, Muse contended, and he expects inventory corrections across the sector to be complete by the first half of 2023.
“Tactically,” Muse also likes chip-equipment makers Applied Materials Inc.
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Among Muse’s top investment themes for 2023, the analyst expects AI to remain “a bright spot” among the crowded product cycle road map, and a slow recovery in the PC and smartphone space. Also, Muse said he will be keeping a close eye on neutral-rated Intel Corp.’s
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Elsewhere, Advanced Micro Devices Inc.
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