Could Semiconductor Stocks Become The New Oil In Financial Markets?

A Wall Street firm sees a bumpy yet rewarding wave with semiconductor stocks in 2022 and named Nvidia stock its top pick.

Several analysts are still optimistic about semiconductor stocks, despite their recent downturn. Some go further to call semiconductors the new oil of the rapidly digitizing global economy.

Semiconductors do play a critical role in a host of hot areas. They include cloud computing, artificial intelligence, 5G wireless, advanced driver-assistance systems, autonomous vehicles and the METAVERSE.

Macroeconomic factors such as inflation, rising interest rates, geopolitics and Covid lockdowns could make chip stocks volatile in the current year.

Despite the bumpiness, a worthwhile 2022 setup can obviously be seen. Nvidia stock is his top pick among semiconductor stocks. The graphics-chip maker has the most upside to analyst estimates. Nvidia (NVDA) is seeing secular growth in gaming, AI, metaverse and automotive.

Nvidia stock is rated as buy with a price target of 375. In afternoon trading on the stock market today, Nvidia stock slid 1.1%, near 269.50.

Elsewhere among semiconductor stocks on Monday, Taiwan Semiconductor Manufacturing (TSM) reported better-than-expected sales for the month of December. TSM shares climbed 0.7%, near 124.30.

In December, Taiwan Semi’s sales rose 32% year over year in local currency, topping estimates. For the fourth quarter, Taiwan Semi generated the equivalent of $15.76 billion in revenue. Analysts were expecting $15.64 billion, according to FactSet. Taiwan Semi reports results in new Taiwan dollars.