Lingering logistic disruptions continue to be a significant headwind for the semiconductor industry. Although market growth has slowed in recent months, semiconductor sales surged 7.3% year-over-year to $49 billion in July 2022.

John Neuffer, Semiconductor Industry Association’s President and CEO, said, “Sales into the Americas market increased 20.9% year-to-year to lead all regions.”

Furthermore, according to Vantage Market Research, the global semiconductor market is estimated to grow at a CAGR of 8.8% from 2022 to 2028.

Given the backdrop, it could be wise to consider buying quality semiconductor stocks Broadcom Inc. (AVGO), QUALCOMM Incorporated (QCOM), Micron Technology, Inc. (MU), and Photronics, Inc. (PLAB).

Broadcom Inc. (AVGO)

AVGO creates, manufactures, and distributes a range of semiconductor products focusing on analog III-V-based products and complicated digital and mixed signal complementary metal oxide semiconductor-based devices globally. The company operates in two segments, Semiconductor Solutions and Infrastructure Software.

On September 6, 2022, AVGO announced the delivery of its Trident 4C Ethernet switch ASIC, 12.8 terabits/second security switch. This product detects flow anomalies in real-time and is a one-of-its-kind weapon against cyber threats.

Also, on August 22, 2022, AVGO and Tencent Holdings Ltd. announced their strategic agreement to enhance the uptake of high bandwidth co-packaged optics network switches for cloud infrastructure.

These new ventures should diversify AVGO’s portfolio.

AVGO’s net revenues came in at $8.46 billion for the third quarter ended July 31, 2022, up 24.9% year-over-year. Moreover, its net income came in at $3 billion, up 66.4% year-over-year. Also, its EPS came in at $7.15, up 70.2% year-over-year.

AVGO’s revenue is expected to increase 19.9% year-over-year to $32.90 billion in 2022. Its EPS is expected to increase 31.9% year-over-year to $36.95 in 2022. It surpassed EPS estimates in all four trailing quarters. Over the past year, the stock has gained 3.6% to close the last trading session at $511.93.

AVGO’s strong fundamentals are reflected in its POWR Ratings. The stock’s overall A rating indicates a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

AVGO has an A grade for Quality and a B grade for Growth and Sentiment. In the B-rated Semiconductor & Wireless Chip industry, it is ranked #4 out of 94 stocks. Click here for the additional POWR Ratings for Value, Momentum, and Stability for AVGO.

QUALCOMM Incorporated (QCOM)

QCOM is involved in the creation and marketing of key technologies for the global wireless market. The company operates through three segments: Qualcomm CDMA Technologies (QCT); Qualcomm Technology Licensing (QTL); and Qualcomm Strategic Initiatives (QSI).

On July 27, 2022, QCOM strengthened its strategic partnership with Samsung Electronics Co., Ltd., aiming to deliver a premium consumer experience for Samsung Galaxy devices buyers. This move is expected to solidify the consumer base for both companies.

QCOM’s total revenues came in at $10.94 billion for the third quarter ended June 26, 2022, up 35.7% year-over-year. Moreover, its net income came in at $3.73 billion, up 84% year-over-year. Also, its EPS came in at $3.29, up 85.9% year-over-year.

QCOM’s revenue is expected to increase 32% year-over-year to $44.18 billion in 2022. Its EPS is expected to increase by 14.3% per annum for the next five years. It surpassed EPS estimates in all four trailing quarters. QCOM’s shares have gained marginally intraday to close the last trading session at $128.85.

QCOM’s overall B rating equates to a Buy in our POWR Ratings system. It has a B grade for Value, Sentiment, and Quality. It is ranked #14 in the Semiconductor & Wireless Chip industry.

Beyond what is stated above, we’ve also rated QCOM for Stability, Momentum, and Growth. Get all QCOM ratings here.

Micron Technology, Inc. (MU)

MU creates, produces, and markets memory and storage goods internationally. The company operates through four segments: Compute and Networking Business Unit; Mobile Business Unit; Storage Business Unit; and Embedded Business Unit.

On September 1, 2022, MU declared its plans to build a new fabrication facility in Boise, Idaho, to produce cutting-edge memory, with an estimated $15 billion in investments.

Also, on August 9, 2022, MU revealed its plans to invest $40 billion in the construction of cutting-edge memory manufacturing in the U.S. These investments should boost its operating capabilities.

MU’s total revenues came in at $8.64 billion for the third quarter ended June 2, 2022, up 16.4% year-over-year. Its net income came in at $2.63 billion, up 51.4% year-over-year, while its EPS came in at $2.34, up 53.9% year-over-year.

Street expects MU’s revenue to increase 11.3% year-over-year to $30.82 billion in 2022. Its EPS is expected to increase 35.1% year-over-year to $8.19 in 2022. It surpassed EPS estimates in all four trailing quarters. MU’s shares have gained marginally intraday to close the last trading session at $55.39.

MU’s strong fundamentals are reflected in its POWR Ratings. It has an overall B rating, equating to a Buy in our POWR Ratings system. It has an A grade for Value and a B for Quality. It is ranked #30 in the same industry.

Beyond what is stated above, we’ve also rated MU for Stability, Sentiment, Momentum, and Growth. Get all MU ratings here.

Photronics, Inc. (PLAB)

PLAB and its subsidiaries produce and sell photomask goods and services in the US, Taiwan, Korea, Europe, China, and other countries. It sells its products to semiconductor and FPD manufacturers, designers, foundries, and other high-performance electronics manufacturers.

On August 30, 2022, Frank Lee, CEO, said, “Customers continue to place their trust in Photronics to support their technology roadmap by supplying the high-quality photomasks required for innovative designs that meet consumer demand.”

He added, “We are expanding capacity and growing volumes while controlling costs and capitalizing on operating leverage to deliver higher margins.”

PLAB’s total revenues came in at $219.95 million for the third quarter ended July 31, 2022, up 28.9% year-over-year. Its net income came in at $31.23 million, up 82.9% year-over-year. In addition, its EPS came in at $0.51, up 82.1% year-over-year.

Analysts expect PLAB’s revenue to increase 24.2% year-over-year to $824.53 million in 2022. Its EPS is expected to grow 10% per annum for the next five years. It surpassed EPS estimates in all four trailing quarters. Over the past year, the stock has gained 9.4% to close the last trading session at $15.57.

PLAB’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, equating to a Buy in our POWR Ratings system. It has an A grade for Value and a B for Quality and Growth. It is ranked #8 in the same industry. Get PLAB ratings for Stability, Sentiment, and Momentum here.

AVGO shares were trading at $523.95 per share on Friday morning, up $12.02 (+2.35%). Year-to-date, AVGO has declined -20.07%, versus a -14.01% rise in the benchmark S&P 500 index during the same period.

About the Author: Riddhima Chakraborty

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...

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