Investors’ Interest in Semiconductor Stocks
2017 has been the year of the chip. Particularly, it has been the year of the semiconductor. Tech stocks have dominated markets this year, and a large part of that support has come from its chip-producing companies.
Semiconductor stocks have surged as their capabilities continue to become more essential to our daily life. As a result, markets have responded. They’ve sent semiconductor stock prices soaring in the past few months, with few skeptics questioning their continued rise.
Nvidia: The Golden Child
Nvidia ( NVDA) is the golden child of the semiconductor community. It has seen its stock price grow more than double this year. The company was founded as a manufacturer of 3D graphic-processing units. But its recent meteoric rise is largely due to the newfound uses of its product. Nvidia’s most popular chips, the GeForce GTX 1080 and 1070, can be used for mobile computing, automation, and cryptocurrency mining. That is, of course, in addition to its original gaming purpose.
The rise of Bitcoin has helped Nvidia, along with many other semiconductor stocks, skyrocket alongside its historic returns. Cryptocurrency mining has taken the investing community by storm. Meanwhile, some firms support it while others continue to dismiss it. Either way, when billions of dollars are flowing on a daily basis, someone is making money. And while not every Bitcoin owner has made historic returns, Nvidia continues to take advantage of their niche market.
AMD: A Worthy Competitor?
Although Nvidia has dominated the market for semiconductor stocks, Advanced Micro Devices ( AMD) has started to tighten the race. AMD joined other high-end graphic chip producers by releasing the new Radeon RX Vega 56 and 64 graphics cards. Similar to Nvidia, AMD has also benefited greatly from the rise of cryptocurrency.
The day the new Radeon chips were released, they sold out immediately. Cryptocurrency miners bought more in an effort to speed up their mining. AMD’s CEO, Lisa Su, explained during Q3 earnings report that cryptocurrencies are not a long-term growth factor for its chips. But the company has profited off the newfound obsession with the digital currency.
The Rest of the Semiconductor Industry
Many investors are quick to chalk up semiconductor stocks’ historic rise as overvaluations; however, Broadcom’s ( AVGO) recent bid of a semiconductor company proves quite the opposite. Chip-maker Broadcom recently bid $103 billion to buy Qualcomm ( QCOM), a chip-processing company that specializes in mobile phone hardware. With Broadcom’s latest bid, the company is attempting to take over the mobile computing industry.
The acquisition would allow Broadcom to take over the chip industry. This supplies nearly 2 billion smartphones expected to launch next year. Although we have no idea how long cryptocurrency will last, Broadcom’s bid proves that chip-making companies are here to stay. Highly advanced graphic-processors are essential to growth in automation, mobile computing, and gaming. Whether Bitcoin mining continues to grow or digital currencies go bankrupt tomorrow, one thing is clear. Graphic-processors are the key to technology growth.
The Bottom Line
Semiconductor stocks, led by Nvidia, AMD, and many others, have demonstrated meteoric rises this past year. They continue to push into the forefront of the investing community. While the industry has historically been known for its high-speed gaming, mobile, and automated functions, the rise of cryptocurrency is contributing to chip-makers’ skyrocketing share prices.
Graphic-processing chips are a key to cryptocurrency mining, and Bitcoin-enthusiasts have been quick to buy every last one of them. Blockchain computations and graphic-processing chips will grow more complex. As a result, they’ll play an integral role the future of technology. The market has responded appropriately by racing to invest in the industry’s leading companies.
Download the Rapunzl App & Invest For Free or learn more at our website.
Originally published at https://blog.rapunzlinvestments.com on November 9, 2017.
