Chip stocks won't be affected by Russia sanctions, analyst says, and names her favorites

Published Tue, Mar 1 202211:24 PM EST

Bernstein's Stacy Rasgon has outlined her favorite global semiconductor stock picks, as the market assess the potential impact of sanctions imposed on Russia. The penalties are not expected to have a significant impact on the chip sector, according to Rasgon and her colleagues at Bernstein. The bank notes that Russia is estimated to consume less than 0.1% of global chip purchases and accounts for less than 2% of global personal computer, handset, and smartphone shipments. The country imports just 2% of automotive shipments and about 1% of server shipments, the bank added. "Hence we would not expect sanctions and export controls on Russia to have any real material impact on the various end markets that are major drivers of semiconductor demand," Rasgon said on Feb. 28. Stock picks Bernstein's list of top semiconductor stocks — all overweight-rated by its analysts — include Taiwan's Taiwan Semiconductor Manufacturing Company , MediaTek and Novatek Microelectronics , Hong Kong-listed Hua Hong , Tokyo Electron and Infineon . The bank also likes Advanced Micro Devices , which it says is continuing to "fire on all cylinders" and notes that its valuation has become more attractive. The bank has a price target of $150 on the stock, which closed at around $123 on Feb. 28, an implied upside of 22%. Analog Devices is another of Bernstein's top picks. The bank says the completion of the company's acquisition of Maxim Integrated will lead to earnings-per-share growth and accelerated cash return. The bank has a price target of $210 on the stock, representing a 31.3% potential upside to the stock's closing price of $160 on Feb. 28. Bernstein favors Broadcom for its "good narrative and margin of safety." The bank said the company enjoys revenue visibility, "superb margins and free cashflow" and has an attractive valuation. It has a price target of $725 on the stock, which closed at around $587 on Feb. 28, an implied upside of 23.5%. Nvidia is another Bernstein pick. The company's product cycles are driving significant earnings growth and supporting further upside in its share price, according to the bank. Bernstein has a price target of $360 on the stock, which closed at around $244 on Feb 28, representing a 47.5% potential upside. The bank also likes Qualcomm for its "numerous potential value drivers," and a clearer path of growth. The bank has a price target of $250 on the stock, representing a 45.3% potential upside to its closing price of around $172. Rounding off Bernstein's top picks are Lam Research and Applied Materials . The bank has a "positive view" on secular growth in wafer fab equipment and believes the two companies have key several drivers, include growth in some markets and higher capital return. Bernstein has a price target of $700 on Lam Research, which closed at around $561 on Feb. 28, representing a potential upside of 24.8%. The bank has also ascribed a price target of $175 on Applied Materials — an implied upside of 30.6% to its closing price of around $134 on Feb. 28.

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Bernstein's Stacy Rasgon has outlined her favorite global semiconductor stock picks, as the market assess the potential impact of sanctions imposed on Russia.