Last year, the pandemic-fueled demand for semiconductor components caused not only a shortage of them, but also an increase in stock prices in the semiconductor sector. J.P. Morgan believes that the potential for further growth has not yet been fully selected, and over the next year and a half, quotes may on average strengthen by 15-20%.
The analytical note by J.P. Morgan cites Seeking Alpha. According to the source, the revenue of companies in the semiconductor sector in 2021 will increase by 8-10%, while the revenues of core companies will grow by 15-18%. Among the favorites of this year, the authors of the forecast include the shares of Broadcom, which is well diversified in terms of its presence in various market segments. Data center and networking components account for about a quarter of its revenue.
The continued high demand for semiconductor components allows J.P. Morgan recommends that investors buy shares in companies that produce materials and equipment for lithographic production. These are KLA, Lam Research, Applied Materials and ASML. Their share price dynamics will be sensitive to news about US trade policy towards China. If sanctions intensify, then the high degree of dependence of the first three suppliers on the Chinese market will lead to a decrease in the price of their shares.
Among the favorable factors this year, analysts tend to attribute the improvement in macroeconomic indicators, the expansion of 5G communication networks, the growth of demand for smartphones with the support of these networks, as well as the recovery of the automotive market. According to IDC forecasts, the PC market will grow by 1.4% by the end of 2021, as demand is still ahead of supply.
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