The equity market has been volatile amid COVID-19-omicron-related concerns and the Fed’s tapering activities. However, fundamentally sound semiconductor stocks Microchip Technology (MCHP), ASE Technology (ASX), and Alpha and Omega Semiconductor (NASDAQ:AOSL) have bucked the market’s downtrend and we think are well-positioned to gain in the near term. They also have a B (Buy) rating in our proprietary rating system. Read on.The major stock market indexes rebounded yesterday as investors reassessed their COVID-19 omicron-variant related fears. However, the stock market has remained volatile, with the Federal Reserve considering shutting down its support for financial markets sooner-than-expected. In addition, the U.S. economy created far fewer jobs than expected in November, adding to the bleak outlook. And amid current market volatility, an ongoing semiconductor chip shortage continues to impact the production of cars, consumer appliances, personal computers, and smartphones.
According to JPMorgan Chase & Co. (NYSE:JPM) analyst Gokul Hariharan, the semiconductor chip shortage may drag on until 2022. However, the situation is expected to improve from mid-year onwards when supplies become more readily available. According to an International Data Corporation (IDC) report, the semiconductor market is expected to reach $600 billion by 2025, growing at a 5.3% CAGR, versus its 3-4% historical growth.
Given this backdrop, we think it could be wise to bet on quality semiconductor stocks Microchip Technology Incorporated (NASDAQ:MCHP), ASE Technology Holding Co., Ltd. (NYSE:ASX), and Alpha and Omega Semiconductor Limited (AOSL). These names have outperformed the major market indexes’ minimal returns over the past week. In addition, they have an overall B (Buy) rating in our proprietary POWR Ratings system.