Oil is out.
And semiconductor stocks? They’re definitely in.
Decades ago, it seemed as though oil had nowhere to go but up. We used it, and still do, for pretty much everything. But there has been a shift in the winds, and now oil stocks are far less stable. In fact, many haven’t seen a strong rise in share price in the last few years. That is unless they’re either acquired, or move towards more diversified assets.
But semiconductors? These stocks are on the rise.
Source: Getty Images
Bullish, but bumpy
For investors looking to gain lots of rewards in the long term, semiconductor stocks offer an enormous opportunity. However, the near term might be a bit bumpy. As the entire global economy continues to digitize rapidly, semiconductor companies continue to play an enormous role.
Of course, you might have watched them spout in recent times thanks to the expansion of artificial intelligence (AI). And that’s certainly true. We’ll need more semiconductor chips so that we can receive faster, more responsive AI. But it goes beyond that one area.
Semiconductors are critical in the role of cloud computing, 5G wireless networks, even autonomous vehicles. However, more recent times have been difficult for the industry. Higher inflation and interest rates, along with geopolitical issues, have been a burden on this burgeoning industry. But I wouldn’t give up on it quite yet.
We’ve seen success!
I’m sure you’ve already come across this name, but Nvidia (NASDAQ: NVDA) remains a top choice among many investors. The company quickly became one of the ‘Magnificent 7’ over the last year. It even managed to topple Amazon (NASDAQ: AMZN) to take the fourth most-valued company spot for a little while.
That over-a-trillion-dollar market cap has been matched by a rising share price. The graphics chipmaker continues to post a lot of upside for analysts. While the company may have started out in gaming, it has quickly shown that it can help meet the demand as the world expands its semiconductor chip use.
The thing is, it’s pricey. Like, really pricey. And while NVDA stock certainly remains a great investment, it could also be seen as a risky one. Not only for its share price, but also ongoing macro issues. What’s more, should supply-chain issues hit, this could really hurt Nvidia stock. So there’s another Canadian company I would consider instead.
Canada’s biggest chipmaker
While Canada’s largest semiconductor stock is nowhere near Nvidia stock, it’s still a strong one to consider. POET Technologies (TSXV: PTK) is a semiconductor stock already providing its products on a global scale. But shares are still in penny status, trading at $1.75 as of writing.
The company was doing quite well, but during its last quarter missed out on earnings estimates. Shares are down 69% in the last year. So again, there could be a bumpy ride for this stock in the near term. Long term, however, we’re going to continue to need these semiconductor stocks. And Poet stock looks like the best of the best.
Granted, there is definitely going to be a lot of competition, and not just from the United States. India, China, and other countries have already been increasing their deployment of semiconductor chips. However, if you’re looking for a Canadian company set up for success, I would still consider Poet stock as a solid long-term bet.
Bottom line, everything is turning digital. And everything digital runs on semiconductors. So if you’re wanting to create major returns, this is the sector to beat.
