3 Chip Stocks to Buy on CHIPS Act Boost


  • Advanced Micro Devices (AMD): Semiconductor name with some of the strongest leadership in the industry.
  • Intel (INTC): U.S. chip maker that may benefit most from the CHIPS Act because it does its own manufacturing.
  • Nvidia (NVDA): Recent Wall Street darling also noted for its potential metaverse applications.
AI. Circuit board. Technology background. Central Computer Processors CPU concept. Motherboard digital chip. Tech science background. Integrated communication processor. 3D illustration representing semiconductor stocks
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Chip stocks may be about to receive a significant boon from Capitol Hill. Currently, officials are considering a substantial spending package aimed at revitalizing the U.S. semiconductor industry. The $52 billion bill is called the Creating Helpful Incentives to Produce Semiconductors for America (CHIPS) Act.

If the CHIPS Act passes, it will help U.S. companies remain competitive as China moves to dominate the chip market. According to Senate Majority Leader Chuck Schumer, lawmakers could vote on the bill as soon as today. That has semiconductor stocks rising on momentum for the legislation.

Still, this bill has also garnered considerable opposition. Some members have spoken out against it, including Senate Minority Leader Mitch McConnell.

Adding to the uncertainty is the fact that some chipmakers feel the bill “disproportionately benefits” companies like Intel (NASDAQ:INTC). Intel produces its own chips rather than outsourcing to manufacturers. Seeking Alpha reports that companies like Advanced Micro Devices (NASDAQ:AMD) and Nvidia (NASDAQ:NVDA) would not benefit from the bill in the same way. However, Intel argues that even chip companies that manufacture offshore “stand to gain a wider range of cost-competitive, US-based manufacturing options.”

By that logic, the passing of the CHIPS Act will — even if slimmed-down — help propel all chip stocks forward. As such, investors may want to stock up on some of the best companies in the industry.

AMD Advanced Micro Devices $84.75
INTC Intel $40.19
NVDA Nvidia $166.61

Chip Stocks to Buy: Advanced Micro Devices (AMD)

AMD Stock is Going From Strength to Strength but Beware of Its Valuation
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After a difficult month, AMD stock is finally enjoying some growth. Despite dipping yesterday in after hours trading, shares are up 8% for the past five days.

This recent momentum has been driven by both CHIPS Act hype and a positive earnings report from Taiwan Semiconductor (NYSE:TSM). The success of TSM has already helped restore some investor confidence in the semiconductor industry. Now, the CHIPS act is poised to do the same on an even larger scale.

InvestorPlace contributor Nicolas Chahine likes AMD stock in part because of the company’s leadership. Chahine also believes that, once markets stabilize, a more positive narrative will carry chip stocks back to profitable levels. The CHIPS Act could be the perfect catalyst to accomplish something like that.

Intel (INTC)

Sign of Intel (INTC stock) at entrance of The Intel Museum in Silicon Valley
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If the CHIPS Act issues a new chip stocks boom, Intel will more than likely lead the charge. As the leading U.S. chip manufacturer, the tech giant certainly stands to gain from the legislation. What’s more, even as INTC stock rises on mounting anticipation, Intel is still significantly undervalued for a blue-chip stock, making it a highly tempting play.

The reasons to bet on Intel don’t stop at the pending bill, either. Intel is also expanding rapidly. InvestorPlace contributor Faisal Humayun notes that, for 2022, “Intel has guided for net capital expenditure of $27 billion.” Humayun also points out that the company recently “acquired land to build a manufacturing plant in Ohio.” Lastly, back in March, Intel announced a 33 billion euro expansion in Europe.

Chip Stocks to Buy: Nvidia (NVDA)

Nvidia (NVDA) logo on a microchip
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Nvidia tends to dominate coverage of chip stocks. In part, the company has risen to prominence for its metaverse applications. Now, though, the potential chip boom may push this Wall Street darling up even further.

Recently, Nvidia received a significant endorsement; Paul Pelosi, the husband of House Speaker Nancy Pelosi, purchased 20,000 shares of NVDA stock. Given the timing, this implies he has reason to believe Nvidia may benefit from the bill. That’s even despite arguments that names like Nvidia will not benefit nearly as much from the CHIPS Act.

Experts have also speculated that NVDA stock is a buy ahead of its upcoming earnings report. The stock has tremendous potential due to its applications for both metaverse tech and data centers. While it has been a difficult quarter for all high-growth tech stocks, the CHIPS Act may generate the type of momentum that NVDA needs to make up lost ground.

On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Article printed from InvestorPlace Media, https://investorplace.com/2022/07/3-chip-stocks-to-buy-on-chips-act-boost/.

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