- CNBC's Jim Cramer and technician Carolyn Boroden inspect the charts of some key semiconductor stocks.
- Investors may see quicker profits by buying more established plays like Intel, Boroden says.
- But the charts reveal that stocks like Nvidia may need some time to digest their recent gains.
Behind every cloud king, there's a semiconductor company making its technology work. But recently, semiconductor stocks have been on the fritz, so on Tuesday, CNBC's decided to check in on some key players.
"Lately, the chip stocks have become a lot more inconsistent — some big winners, some big losers — leaving the broader group kind of, let's say, directionless," the "Mad Money" host said.
So Cramer recruited Carolyn Boroden, the technician behind FibonacciQueen.com and his colleague at RealMoney.com, to take a closer look at the charts of four major chipmakers: Nvidia, Intel, Texas Instruments and Broadcom.
The stock of Nvidia, which makes powerful chips for data centers, graphics and gaming, recently pulled back to the $250s before launching a comeback and rallying almost $30, grazing the $292 level in Monday's trading session.
"Boroden says that if you're not already in this one, you're probably a little late to the party," Cramer said, referencing Nvidia's daily chart.
"While she could see it rallying another $10 bucks or even $11 bucks from here, that's not a lot of upside," he continued. "As much as I love Nvidia's business, you're chasing it if you buy the stock up here and we hate to chase."
Semiconductor manufacturer Intel's weekly chart shows the stock lagging the rest of the chip names, so much so that Boroden thinks it could be poised for a rally beyond its 3.5 percent gain on Tuesday.
Using Fibonacci sequences to gauge Intel's potential, Boroden pinpointed a key floor of support at $42 a share, well below Intel's current price. She added that if the stock clears the $49 level, it could climb to over $61.
"But ... you know how this works: if Intel falls below her floor of support around $42.50, all bets are off and she thinks it could go lower," Cramer said. "But for now, she thinks the bullish scenario is looking a lot more likely."
Boroden spotted a telling pattern in Texas Instruments' weekly chart. Most recently, the stock lost $16 from its June highs to its September lows, then rebounded in the last several weeks. The last time Texas Instrument took a similar hit was in April — a drop that amounted to roughly $16. A few years ago, the stock also endured a $16 drop.
"If it happens again, don't be surprised if the stock reverses after a similar fall," Cramer said. "I know, it seems silly — if you tried to put this in a screenplay about Wall Street, they'd laugh you out of the room. What can I say? Truth is dumber than fiction."
What does that mean for the stock going forward? Boroden said that if Texas Instruments can hold above $102 a share, it could see gains up to the $122 level. If it dips below $102, though, it could fall as low as $94 before bouncing back.
"At the moment, though, the future's looking good for TXN," Cramer said. "The year's been quite good for the company."
Boroden felt a bit more wary of Broadcom after its stock's recent surge. She noted that its ceiling of resistance was at $251, up about $3 from the stock's current price, but said if Broadcom could push past it, there could be a lot more upside.
"Specifically, Boroden thinks this stock could run to $309 before it hits another ceiling," Cramer said. "Ideally, though, she'd really like to buy this one on a pullback. The stock's had an epic run from its bottom."
Maybe it's time for investors to take a break from the hottest names in town and fall back on some of the old-line players, Cramer and Boroden concluded.
"The charts, as interpreted by Carolyn Boroden, suggest that the neglected old-school semiconductor kingpins like Intel and Texas Instruments could be ready to roar, while some of the newer, faster-growing names like Broadcom and Nvidia might need to take some time to digest their gains before they resume their long march higher," the "Mad Money" host said. "I'm with her, but, of course, for fundamental reasons."
Disclosure: Cramer's charitable trust owns shares of Nvidia.