4 Semiconductor Stocks Outperforming NVIDIA in 2021

NASDAQ: INTC | Intel Corporation News, Ratings, and Charts

INTC – The semiconductor industry has benefitted from a favorable backdrop since the beginning of the COVID-19 pandemic, which precipitated a massive increase in the demand for technology-related products and services. Leading chipmaker Nvidia Inc. (NVDA) has gained from the surge in chip demand. However, it expects a slowdown in its data center business. Its ARM acquisition is also being scrutinized by European and U.K. lawmakers. Thus, investors looking to capitalize on the industry’s gains should consider Intel (INTC), NXP Semiconductors (NXPI), United Microelectronics (UMC), and Rambus (RMBS). We think these stocks, which have strong fundamentals, have the capacity to outperform NVDA through year’s end.

Rising demand for technology-related products since the onset of the COVID-19 pandemic has  made for a favorable environment  for the semiconductor industry. Over the past year, people have grown to depend on remote working, virtual learning, gaming and online shopping as integral parts of their lives. Hence, technological products empowered by advanced chipsets have seen heavy demand. Besides consumer electronics, chipmakers are also witnessing a boom in demand from automotive vehicles, cloud computing and 5G network upgrades.

Because  COVID-19 disruptions have brought about a shortage of semiconductor chips, the Semiconductor Industry Association (SIA) has urged President Biden to include funding for chip manufacturing and research in his proposed economic recovery plan.

Nvidia Inc. (NVDA), one of the leading semiconductor companies, has benefited significantly from these secular tailwinds. It has a dominant presence in the GPU space, and its  graphic chips have seen heightened demand for gaming, self-driving vehicles, and data centers. NVDA’s data center revenue for the third quarter ended September 30, 2020, surged 162% year-over-year to $1.9 billion.

However, the company anticipates some softness in its  data center segment in the coming quarters. That’s because China’s Huawei did not purchase networking products from Mellanox, which was acquired recently by NVDA. Moreover, the company’s $40 billion ARM acquisition has come under scrutiny of the European Union and the U.K. government.

Fortunately,  there are other chipmakers with strong growth prospects that investors can evaluate, including Intel Corporation (INTC), NXP Semiconductors N.V. (NXPI), United Microelectronics Corporation (UMC), and Rambus, Inc. (RMBS). These stocks have also thrived since the onset of the pandemic based on their sound fundamentals, and we think are well-positioned to outperform NVDA through the remainder of 2021.

Intel Corporation (INTC)

INTC is a global semiconductor leader that  develops and markets  solutions for the cloud, and smart and connected devices for retail, industrial, and consumer uses. DCG, IOTG, Mobileye, NSG, PSG, CCG are the segments through which the company operates. The company also provides Internet of Things (IoT)products that include high-performance computer solutions for targeted verticals and  embedded applications.

INTC has appointed Pat Gelsinger as the new eighth CEO of the company. Gelsinger is an industry veteran with more than four decades of technology and leadership experience and has been a part of INTC for the past 30 years.

During the fourth quarter ended December 31, 2020, INTC’s revenue fell  1% year-over-year to $20 billion. Its EPS for the quarter declined  to $1.42 from $1.58 posted in the same period last year. The company’s data-centric business unit’s revenue declined 11% year-over-year, while its PC-centric business gained 9% to $10.9 billion.

INTC has commenced production of 10nm-based 3rd Gen Intel® Xeon® Scalable processors (“Ice Lake”). The company has also entered the discrete graphics market with Intel® Iris® Xe MAX graphics, its first Xe-based discrete GPU.

Analysts expect revenue for the quarter ending March 31, 2021 to be $17.5 billion,  representing  an 11.5% year-over-year decline. Its EPS is likely to grow at the rate of 5.4% per annum over the next five years.

INTC has declined 7.1% during the past year to close yesterday’s trading session at $61.85. Over the past six months, the stock gained 27.8%.

INTC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors with the weighting of each optimized to improve overall performance.

INTC also has a grade of A for Value and Quality, and B for Sentiment and Momentum. Of the 96 stocks in the B-rated Semiconductor & Wireless Chip industry, it is ranked #10.

In addition to the POWR Ratings grades I’ve just highlighted, you can see INTC’s ratings for Growth and Stability, here.

NXP Semiconductors N.V. (NXPI)

NXPI is an American-Dutch semiconductor company that manufactures a broad range of automotive products processors and microcontrollers.

NXPI recently  closed  two manufacturing plants in Austin, Texas in response to  a historic winter storm that has gripped most of the state. As a result, utility providers are prioritizing service to residential areas.

During the fourth quarter ended December 31, 2020, NXPI’s revenue climbed 9% over the year to $2.5 billion, led by growth in the Automotive and Mobile segments. Its EPS for the quarter was $1.08 compared to a loss of $0.08 posted in the same period last year.

Analysts expect NXPI’s revenue for the quarter ending March 31, 2021 to be $2.6 billion, representing  a 26% year-over-year increase. Its EPS is expected to grow at the rate of 16.8% per annum over the next five years.

NXPI ended yesterday’s trading session at $189.69, surging 42.6% over the past year. During the past six months, NXPI climbed 58.8%.

NXPI’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. It has a B grade for Growth, Momentum and Sentiment. It is ranked #22 in the Semiconductor & Wireless Chip industry.

In total, we rate NXPI on eight different levels. Beyond what we stated above we have  also given NXPI grades for Stability, Value, and Quality. Get all the NXPI ratings here.

United Microelectronics Corporation (UMC)

UMC is a semiconductor wafer foundry that operates in Taiwan, China, Singapore, Hong Kong, Japan, the United States, Europe, and other countries. Through its Wafer Fabrication and New Business segments, the company provides mask tooling, circuit design, wafer fabrication, and assembly and testing services. UMC is also involved in the research, development, and manufacturing of products in the solar energy and LED industries.

During the fourth quarter ended December 31, 2020, UMC’s revenue rose 1% to NT$ 5.30 billion. Its revenue from the 28nm wafer business climbed 18% during the quarter. Its EPS for the quarter climbed to NT$0.92 from NT$0.75. UMC’s sales revenue for the month of January grew 10.2% year-over-year to NT$15.53 billion.

A consensus revenue estimate for the quarter ending March 31, 2021 is $1.6 billion, representing  a 14.4% increase year-over-year. Meanwhile, its EPS is likely to climb 20% to $0.06.

Over the past year, UMC has surged 288.7% to end yesterday’s trading session at $10.29. Over the past six months, the stock has rallied 164%.

UMC strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to Strong Buy in our proprietary rating system. UMC has a B grade  for Growth, Stability, Sentiment, and Quality. In the Semiconductor & Wireless Chip industry, it is ranked #4.

Click here to see the additional POWR Ratings for UMC (Momentum and Value).

Rambus, Inc. (RMBS)

RMBS is a leading semiconductor company whose technology solutions include memory, chip interfaces and architectures, end-to-end security, and advanced LED lighting.

RMBS’s revenue during the fourth quarter ended December 31, 2020 climbed 3.4% over the year to $61.9 million. Its loss per share widened to $0.11 compared to $0.09 posted in the same period last year. The company  generated $42.1 million in cash provided by operating activities in the fourth quarter.

Analysts expect RMBS’s revenue for the quarter ending March 31, 2021 to be $102.5 million, representing  an 8% decline year-over-year. Its EPS is expected to grow at the rate of 5.3% per annum over the next five years.

RMBS ended yesterday’s trading session at $21.90, gaining 34.2% over the past year. During the past six months, RMBS climbed 48.3%.

It’s no surprise that RMBS has an overall rating of B which equates to Buy in our POWR Ratings system. It has a B grade for Value, Growth and Momentum. It is ranked #31 in the Semiconductor & Wireless Chip industry.

In total, we rate RMBS on eight different levels. Beyond what we stated above we have also given RMBS grades for Stability, Sentiment, and Quality. Get all the RMBS ratings here.

The POWR Ratings are calculated by considering 118 different factors with the weighting of each optimized to improve overall performance.

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INTC shares were trading at $61.74 per share on Thursday afternoon, down $0.11 (-0.18%). Year-to-date, INTC has gained 25.42%, versus a 4.43% rise in the benchmark S&P 500 index during the same period.


About the Author: Namrata Sen Chanda


Namrata is an accomplished financial journalist, with nearly a decade of experience. She specializes in interpreting news releases and framing investment strategies, and has worked with some of the leading companies in real estate, banking, insurance, mutual funds, financial research, fintech, and investment education. More...


More Resources for the Stocks in this Article

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RMBSGet RatingGet RatingGet Rating

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