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3 Buy the Dip Semiconductor Stocks to Scoop Up in May

Published 05/07/2021, 12:30 PM
Updated 05/07/2021, 01:30 PM
© Reuters.  3 Buy the Dip Semiconductor Stocks to Scoop Up in May

© Reuters. 3 Buy the Dip Semiconductor Stocks to Scoop Up in May

The tech sell-off amid the fast-paced economic recovery has caused some promising semiconductor stocks to lose value lately. However, the rising price of semiconductors, due to increased demand from the auto and several tech industries amid a global shortage, should help these stocks rebound quickly. In this scenario, we think NXP Semiconductors (NASDAQ:NXPI), KLA Corporation (KLAC), and Skyworks Solutions (NASDAQ:SWKS) could be solid bets at their current price levels.The semiconductor industry thrived last year on increased demand for electronic devices from companies and individuals seeking to stay connected and entertained during the worst of the COVID-19 lockdown mandates. The demand for semiconductors increased significantly from the booming electric vehicle (EV) industry also. This, along with a global semiconductor shortage, helped semiconductor stocks gain significantly over the past year. This is evidenced by SPDR S&P Semiconductor ETF’s (XSD) 74.5% returns over the past year versus the SPDR S&P 500 ETF’s (SPY) 47.4% gains.

The industry is expected to continue growing due to mainstream adoption of internet of things (IoT), 5G, artificial intelligence (AI) and electric vehicles (EVs). According to ResearchAndMarkets, the semiconductor market is expected to grow at a CAGR of more than 6% between 2021 - 2026.

While the current tech sell-off has caused the stocks of established semiconductor companies NXP Semiconductors N.V. (NXPI), KLA Corporation (KLAC), and Skyworks Solutions, Inc. (SWKS) to lose some value, they are expected to rebound quickly based on the industry’s solid growth prospects. So, now could be a perfect opportunity to scoop up these stocks.

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