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Time for a breakout? Traders place their chips on the chip stocks

The "Fast Money" traders debated which semiconductor stocks might be poised for a breakout ahead of Qualcomm's earnings report on Wednesday.

Besides its good balance sheet, Qualcomm has a nice dividend yield like IBM, according to trader Guy Adami.

"I think the market is sufficiently short enough in this name that when they report on July 20, you could see a rally into earnings," he said.

Trader Dan Nathan thinks that if Qualcomm made a strategic acquisition, that could lead to a breakout.

Trader Tim Seymour said that the company's positioning in China has improved.

"They signed up a ton of new Chinese vendors, that to me was really one of the key headwinds into the stock and I think it's something that's actually a very major tailwind for them now," Seymour said.

For investors who aren't chasing a dividend yield, trader Steve Grasso said Nvidia might be an interesting trade for a "growth chase." Grasso pointed out that the stock is up more than 60 percent year to date, whereas Qualcomm is up more than 10 percent.

Disclosures:

TIM SEYMOUR

Tim Seymour is long APC, AVP, BAC, BBRY, CLF, DO, EDC, EWZ, F, FCX, FXI, GM, GOOGL, GRMN, GE, INTC, LQD, M, MCD, MPEL, NKE, RACE, RAI, RH, RL, SINA, T, TWTR, UA, VALE, VZ, XOM. He is short: SPY, XRT. Seymour's firm is long ABX, BABA, BIDU, CLF, EWZ, F, HD, KO, MCD, MPEL, NKE, PEP, PF, SAVE, SBUX, SINA, VALE, VIAB, WMT, WEN, YHOO, short HYG, IWM

STEVE GRASSO

Steve Grasso is long BA, CC, EVGN, JCP, KBH, MJNA, MU, OLN, PFE, PHM, T, TWTR, GDX Grasso's Kids Own EFA, EFG, EWJ, IJR, SPY. No Shorts. Stuart Frankel & Co Inc. and some of its Partners are long AAPL, AVP, FCX, IBM, KDUS, LDP, MFIN, MJNA, NE, RIG, STAG, TEX, TITXF, URI, VALE, WDR, XRX, ZNGA, CUBA, ICE, HSPO, JCP, NXTD, SDS and short DIA, QQQ, SPY, XLI

DAN NATHAN

Dan Nathan is Long JD Aug call spread, Long TWTR, BABA Aug put spread, IWM long Sept put, XLF long Aug put spread, XLK long Sept Put spread, FXI long Aug put spread, SMH long Aug put spread, long PYPL call calendar, long C Aug put spread, XOP Sept put spread, TGT long Aug calls, TSLA long Aug puts, BAC long Sept put, Long FEZ Nov put spread

GUY ADAMI

Guy Adami is long CELG, EXAS, GDX, INTC. Adami's wife, Linda Snow, works at Merck.