Nomura Sees Chips as Insulated From Volatility and as an Opportunity for Investors

Nomura affirmed buy ratings for Applied Materials, Intel, Qualcomm, Xilinx and KLA, saying the chip industry is insulated from broader market volatility and is a buying opportunity for investors.
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Nomura Instinet is bullish on the semiconductor industry, saying the sector is well insulated against the wider market volatility and presents a buying opportunity for investors.

The firm affirmed buy ratings for Applied Materials  (AMAT) - Get Report, Intel  (INTC) - Get Report, Qualcomm  (QCOM) - Get Report, Xilinx  (XLNX) - Get Report and KLA Corp.  (KLAC) - Get Report.

Analyst David Wong says total semiconductor sales rose 7% in February from a year earlier. That followed 7% growth in January. 

The firm notes that chip and chip-equipment stock prices have dropped substantially in recent weeks, reflecting near-term uncertainty. That decline provides a strong buying opportunity for the sector, according to Wong. 

"We continue to think that the long-term secular growth opportunity for semiconductor equipment is unchanged," he said. 

In addition, "the semiconductor-equipment industry could be a beneficiary of efforts by various governments to support their economies by supporting investment in infrastructure," Wong wrote. 

Last week, the company upgraded Lam Research  (LRCX) - Get Report to buy from neutral while maintaining its $265 price target.

"[Lam] has been affected by and will continue to feel the effects of covid-19 through the majority of calendar 2020," Wong said. 

But this has already been, for the most part, priced into Lam’s stock recently. Lam’s stock is currently trading at a substantial discount to where it was trading at the beginning of calendar 2020, prior to the covid-19 outbreak."

At last check:

Applied Materials shares were 5.2% higher at $44.50.

Intel shares were up 5% at $56.85.

KLA shares added 4.7% to $134.

Lam Research shares were 5.9% ahead at $231. 

Qualcomm shares moved up 4.9% to $68.40.

Xilinx shares gained 2.3% to $80.90.

The VanEck Vectors Semiconductor ETF  (SMH) - Get Report climbed 4.9% to $117.55.