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Investors should carefully pick semis stocks amid the unclear US-China trade talks, and Nvidia is a good bet in the industry, an analyst says.
2018 is a rough year for tech investors, with FAANGs falling out of favor with Wall Street, Chinese techs and semiconductors among the hardest hit.
Recent developments have put pressure on the semiconductors sector. And many of those issues can be tied into problems facing the broader market.
Despite the recent slump, Moody's cites "improved product positioning" in AMD's personal-computing business as well as custom chip uses like video games, which rely heavily on graphics cards for fast-processing and smooth rendering.
For years, AMD trailed Intel, Jefferies says. But the semiconductor maker has easily regained market share as the older competitor struggles to produce 10-nanometer chips. Intel has delayed its rollout of these smaller, next generation chips until at least 2019.
Shares of AMD have climbed 98% since the beginning of the year, easily outperforming the benchmark S&P 500 index's 6% gain in the same period.
The investment firm held 56.9 million shares of AMD as of its most recent filing in August 2017, equating to more than 5% of the chipmaker's total equity. Only Vanguard and BlackRock have larger stakes.
Semiconductor makers, including both AMD and its competitor Nvidia, got an unexpected bump from the cryptocurrency craze of early 2017. However, as prices and interest have waned — bitcoin is down 39% since January 1 — so too has the interest in graphics cards from would-be crypto miners.
“We are bullish on NVDA's outlook and see the company ideally leveraged to some of the most attractive secular growth themes in semiconductors,” Rick Schafer, an analyst at Oppenheimer, told clients in a note Thursday. He has a price target of $262 for the stock.