- Nvidia (NVDA): Once a boutique GPU chipmaker, it’s now an industry juggernaut.
- Advanced Micro Devices (AMD): One of the pioneers in chipmaking, it’s now a leading chipmaker again.
- Enphase (ENPH): A top inverter company that’s essential to powering the solar market.
- Monolithic Power Systems (MPWR): This provider of high quality power solutions for industrial applications, telecom infrastructure and other critical sectors is well positioned.
- ON Semiconductor (ON): Another chipmaker that focuses on power solutions for the high-growth sectors in the digital age.
- Synaptics (SYNA): A leader in human interface semiconductor solutions.
- United Microelectronics (UMC): A Taiwan-based semiconductor foundry business supporting many fabless chipmakers.
The tech sector has been pummeled for some time now. And chip stocks have been some of the biggest victims. But that won’t last much longer.
While supply chain issues have hampered chip inventories, and all the remote work changes the dynamic of how much demand there is for office equipment, there are still some key sectors that will continue to grow.
That’s what we see in the stocks we feature here. Most of these aren’t going to be beneficiaries of the consumer-driven market, their customers are the companies powering electric vehicles, renewable energy, cloud computing, server farms and smart industry.
Most of them are behind the scenes tech players that only serious investors have heard of. Many have been knocked around by the transitioning investment climate. But it looks like the worst is over, and that means significant upside potential.
There’s going to be volatility, but this is a good time to stick a toe in the water.
| Ticker | Company | Current Price |
| NVDA | Nvidia | $259.31 |
| AMD | Advanced Micro Devices | $106.82 |
| ENPH | Enphase | $211.23 |
| MPWR | Monolithic Power Systems | $439.38 |
| ON | ON Semiconductor | $55.70 |
| SYNA | Synaptics | $180.98 |
| UMC | United Microelectronics | $8.87 |
Nvidia (NVDA)
Nvidia (NASDAQ:NVDA) is certainly one of the leading chipmakers in the world at this point. And it’s also one of the top chip stocks in world.
In early March, NVDA was hacked and there was significant consternation that the hack was either China looking for a leg up in chip design, or an attack from Russia. Other large tech firms were also hacked and they banded together to look for the culprit.
It seems now they’re looking at a 16-year-old from England as the culprit, and maybe one from Brazil as well. That’s a bit of a relief, although it’s also a wake up call for NVDA. And it has responded quickly.
Its key focus is graphical processing units (GPUs) that help visualize data. Its chips power crypto mining, server farms, the Internet of Things, telecom networks and numerous other key sectors.
NVDA stock has gained 87% over the past 12 months, but it’s down almost 14% year-to-date. It trades at a high premium, but that’s why it’s worth getting on pullbacks.
This stock has an A rating in my Portfolio Grader.
Advanced Micro Devices (AMD)
Advanced Micro Devices (NASDAQ:AMD) is one of the companies that came from the original brain trust put together at Fairchild in the late 1950s and 1960s. This was when advanced transistors and integrated circuits were changing the possibilities of computing.
Launched in 1969, AMD has a unique pedigree. Initially “lab to fab” company, it spun out its chipmaking foundry and became a “fabless” chipmaker in the 21st Century. Many chipmakers are now fabless, which means they design their chips and then contract with a foundry to produce them. That saves significant costs but it also has unique downsides like the current supply chain challenges.
AMD’s long history has brought it to a point of ascendance right now. It’s a major chipmaker once again and one of the key chip stocks with a very bright future.
AMD stock has gained 27% in the past 12 months, but it’s lost 30% YTD. That means you’re getting one of the greats on sale.
This stock has a B rating in my Portfolio Grader.
Enphase (ENPH)
Three years ago, Enphase Energy (NASDAQ:ENPH) was trading around $10 a share. Today, it’s trading around $200 a share. That’s around a 2,000% run in that time.
But unless you follow the renewable energy market, it’s likely not a company you’ve heard much about. Basically, power from renewable energy comes out as direct current (DC). To make it useful for homes, buildings or the grid, it has to be converted to alternating current (AC). That means all these renewable energy sources need an inverter.
That’s what ENPH makes. And as you can see from its growth, even during a major market transition, it’s been very successful.
This tiny company on the fringes of tech is now a major player in the global renewable energy sector. ENPH now sports a massive price-to-earnings ratio of 202x, but that simply reflects the growth potential still left out there.
ENPH stock has gained 29% in the past 12 months, 11% YTD. Note: This stock has a B rating in my Portfolio Grader.
Monolithic Power Systems (MPWR)
Granted for most people this is a pretty esoteric niche that no one really thinks about unless you’re an electrical engineer. But the uses of Monolithic Power Systems (NASDAQ:MPWR) systems run across an array of industries. They’re the hidden force behind many of the systems we come to rely upon every day. And as we continue to explore the digital age, its systems will be even more in demand.
For example, if you’ve started to see EV charging stations pop up, it’s likely they’re built with an MPWR power bank. Or, if you have a newer car or truck, you probably have an infotainment dashboard. That’s powered by MPWR. So are the cameras and sensors.
The point is, this “invisible” company is well situated in some of the most important sectors already. And as they grow, so will MPWR.
MPWR stock has gained almost 16% in the past 12 months but has lost about 12% YTD due to supply chain issues that have slowed automotive supplies. That won’t last long.
This stock has a B rating in my Portfolio Grader.
ON Semiconductor (ON)
Similar to MPWR, ON Semiconductor (NASDAQ:ON) is a key player in the power and sensor systems sector for the automotive and industrial sectors. As you know, the automotive sector is under pressure because it has fallen victim to the supply chain crisis that’s an ongoing issue.
There are also concerns that China, one of the leading copper and nickel countries — along with Russia — not only has trouble at its ports, but now rail shipments to Europe are no longer running because those rail lines go across Russia. Copper is a key component in wiring and motors.
But that doesn’t change the underlying fact that ON Semiconductor is a leading Fortune 500 company that’s well-positioned in the most important sectors of the next decade.
ON stock has gained 24% in the past 12 months, but is down 23% YTD and is trading at a P/E of 26x. That’s a lot lower than MPWR and other tech leaders.
This stock has a B rating in my Portfolio Grader.
Synaptics (SYNA)
Do you use a fingerprint to access your phone or computer? Do you use voice commands in your car? If so, it’s likely you’re using a Synaptics (NASDAQ:SYNA) product.
And given the fact this type of human interface hardware is becoming increasingly common for security and convenience, SYNA has a very secure future ahead of it. Remember that the early corporate adopters will continue to use these interfaces and more and more companies will follow the leaders.
As this technology becomes more broadly used, it’s also likely there will be more uses for it as well. We’re already seeing some companies using fingerprint interfaces for home door locks. It could be the new car key soon as well.
SYNA stock has gained 24% in the past 12 months but has lost 40% YTD due to the supply chain issue hamstringing the end products that make up much of its revenue.
This stock has a B rating in my Portfolio Grader.
United Microelectronics (UMC)
After featuring all these chip stocks, it only seems logical to have a foundry stock in the list. If it wasn’t for foundries, then none of the great ideas these companies come up with would be worth anything.
United Microelectronics (NYSE:UMC) is a Taiwan-based chip foundry and has been in operation since 1980, so it’s a veteran in the space.
Generally, foundries are considered more commodity plays in the chip sector since they just produce the chips that other companies design. But it still takes a significant amount of tech savvy to run a foundry these days, and UMC is one of the best in the business. It’s also a lesser know Taiwanese foundry, which means it’s easier to grab it at on sale when the other name brands start to turn.
UMC stock has lost 2% in the past 12 months, and 25% YTD. On the upside, it’s trading at a P/E of 11x and its 2.4% dividend helps buy some patience until the upside momentum starts.
This stock has a B rating in my Portfolio Grader.
On the date of publication, Louis Navellier has positions in NVDA, AMD, ENPH, SYNA and UMC in this article. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
