Risk-reward for high-end and AI-chip semiconductor stocks is unattractive, leading to selloff

From Investing.com: 2024-09-05 05:12:08

BCA Research warns that despite continued sales growth, the risk-reward profile for high-end and AI-chip semiconductor stocks is unattractive, leading to a recent sell-off that may not be over. Korean firms may face pressure from potential US restrictions on chip sales to China, impacting global semiconductor companies and TSMC.

BCA Research highlights the surge in demand for AI chips driving sales growth, while legacy chips struggle. Although some chipmakers with weaker fundamentals have seen stock price gains, the outlook for legacy and non-AI chips remains bleak. The introduction of new consumer electronics and industrial machinery with AI capabilities could be a potential catalyst for an upturn.

BCA Research maintains a favorable view on Korean tech stocks, recommending an overweight position due to their less inflated valuations compared to other semiconductor stocks. Taiwanese market and Taiwan Semiconductor Manufacturing Co. (TSMC) are viewed neutrally, amidst ongoing concerns about the global and US economic outlook impacting semiconductor stocks.



Read more at Investing.com: Risk-reward for chip stocks ‘unattractive’, selloff may continue: BCA By Investing.com