Semiconductors drive the technology industry forward. They are also, by application, the backbone of all modern technology. Semiconductors are used in devices ranging from smartphones and laptops to electric vehicles and even electric razors. The companies that develop innovative semiconductors are primed for investment in 2020.
The following are two semiconductor stocks to watch this month and throughout the rest of the year.
Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE: TSM)
Traded with an ADR listing on the New York Stock Exchange, this Taiwanese company is a powerhouse investment option. TSMC is a semiconductor foundry company that manufactures and sells integrated circuits and semiconductor devices. Chips made by TSMC are found in devices ranging from video game consoles to televisions and digital cameras.
Both Nvidia and Advanced Micro Devices are customers of TSMC. This pick is compelling for its affordability and growth. As one of the world’s largest semiconductor manufacturers, it typically grows in proportion to the rest of the tech industry.
The stock is currently outperforming its price target and momentum is still strong. It offers a dividend yield of 1.50% at today’s price.
Nvidia (NASDAQ: NVDA)
Nvidia is the world’s leading graphics card company, and it is emerging as a major force with semiconductors for servers, supercomputers, artificial intelligence, and self-driving cars.
Nvidia is a solid revenue performer with strong profitability. At the end of the previous fiscal year, it reported an EBITDA margin of 29.97% and a gross margin of 62.13%.
This stock is compelling because Nvidia is currently profiting from a boost in personal computer sales. It is also transitioning to provide more semiconductors for server computers, and it is fresh off the launch of a new graphics card line that was well received by analysts and the public.
For its broad exposure to both consumer and professional markets, it’s one of the best semiconductor stocks today. It offers a small dividend with a yield of 0.11%.
Semiconductor Stocks Have Fared Well During the Pandemic
The demand for technology has increased during the Coronavirus Pandemic. Computers are being relied on for education, productivity, and entertainment. Both of these stocks have exposure to consumer markets as well as enterprise markets. Nvidia and TSMC chips can be found in data centers around the world.
The demand for technology isn’t likely to fall any time soon, making these two of the best picks not only in the semiconductor space but also when considering the entire U.S. stock market.
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