© Reuters. 4 Undervalued Chip Stocks to Buy in June
Increasing demand for semiconductor chips, along with the U.S. government’s progressive policies, are creating conditions for potentially exponential growth for the semiconductor industry. So, we think it might now be wise to bet on semiconductor companies Intel (INTC), Vishay (VSH), Tower (TSEM), and Alpha and Omega (NASDAQ:). These names are currently trading at relatively attractive valuations but have a solid growth potential. Let’s discuss.The demand for semiconductor chips is rising due to the increasing use of advanced technology-based devices amid the continued remote working culture. The growing electrical vehicle (EV) market is also boosting the demand for chips. While supply constraints are impacting the global semiconductor industry, the strong demand is allowing companies to raise prices for their chips and by so doing generate substantial profits.
President Joe Biden announced in April 2021 that he has bipartisan support for his proposed $50 billion funding to address the semiconductor shortage, which is a testament to the industry’s immense potential. Moreover, according to a Fortune Business Insights report, the global semiconductor market is expected to grow at an 8.6% CAGR between 2021 – 2028. Investors’ increased interest in the semiconductor industry is evidenced by SPDR S&P Semiconductor ETF’s (XSD) 65.9% returns over the past year versus the SPDR S&P 500 Trust ETF’s (SPY) 37.4% gains over this period.
Given this favorable backdrop, we think it is wise now to bet on chip stocks Intel Corporation (NASDAQ:), Vishay Intertechnology, Inc. (NYSE:) Tower Semiconductor Ltd. (NASDAQ:), and Alpha and Omega Semiconductor Limited (AOSL) because they are still trading at reasonable valuations and have immense growth potential.
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