Key Chip Stock Has Pulled Back After Monster Quarter

2019年12月11日

Chip stocks are the best performing major industry group so far this year, and Applied Materials has been one of the strongest in the index. The provider of semiconductor equipment has scored double beats (earnings and revenue) all four quarters of 2020. AMAT spiked to a new record high above $63 after its last report in mid-November, followed by a pullback into the mid-50s.

Buyers have returned to defend its previous consolidation zone between $55 and $56.50. Now the stock is pushing higher along with the Philadelphia Semiconductor Index and challenging another key zone: AMAT’s November 25 and 26 high of $58.42. Momentum buyers may look to add if the stock clears this level.

Finally, a fundamental note on semiconductors in general: While orders slowed for most of 2019, data from the Semiconductor Industry Association showed them turning positive again in September and October. Furthermore, economic growth estimates have ratcheted up lately – especially after last week’s non-farm payrolls report. That typically favors chips because they’re cyclical.

On top of that, 5G networking is expected to drive growth for several years into the future.