Stocks that benefit from chip shortage

Stocks that benefit from chip shortage

2021-04-09 • Dikemaskini

Stocks of tech and auto sectors are in the focus of traders these days due to the global chip shortage. Let’s find out what is going on with chips and why it’s important for traders.

What happened?

Semiconductors are tiny conductors of electricity also known as chips. They are the key elements of many devices around us: electric vehicles, computers, smartphones, etc. As a cyclical industry, the semiconductor sector goes through periods of ups and downs. But overall, the long-term trend is to the upside as technologies are rapidly developing. Thus, stocks that are closely linked with the semiconductor industry are going to rise and rise no matter what.

Besides, the Covid-19 long lockdowns have speeded up digitalization, raising the already high demand for devices dependent on chips. And at the same time, most chip factories were shut amid coronavirus restrictions that led to the misbalance between demand and supply and resulted in the chip shortage. It’s widely expected that this shortage will last at least through the end of the year. Obviously, the current shortage will result in higher prices of semiconductors. While it would create difficulties for consumers to buy PlayStation 5 or Xbox, chip companies will benefit!

NVIDIA

This company is the best among semiconductors. It offers the most efficient chips for gaming and personal computers. It has also special chips for cryptocurrency mining. In the past 12 months, NVIDIA is up about 116%. After a massive drop during late February – early March, NVIDIA has managed to recover the major part of that loss. When it jumps above the resistance of $590.00, the way up further to the all-time high of February 16 at $612.50 will be open. Sooner or later, the price will get to these highs and set fresh records. Support levels are the 50- and 200-day moving averages of $540.00 and $510, respectively.

NVIDIADaily.png

AMD

AMD, a CPU producer, is eating into Intel's market share in 2021! While 71% belongs to Intel, AMD controls 29%. And AMD is developing really fast. Besides, AMD outruns Intel with its revolutionary Ryzen 5000 – the best gaming CPU. Thus, AMD has a high potential to grow further. Let’s look at the chart! AMD is just below the 50-period moving average of $83.50. The move above this level will drive the pair to the 100-period moving average of $87.00. Support levels are the 200-day MA of $81.00 and the March low of $74.00.

AMDDaily.png

Microsoft

You may wonder why we included Microsoft in this list as it doesn’t produce chips. However, the company has recently announced it would start developing its own chips so that it could become more independent from Intel. Besides, Microsoft has recently claimed it has secured a massive Pentagon contract worth over $20 billion! Investors were encouraged. Microsoft has been rallying up during the last few days. If it jumps above the key psychological mark of $260, the way to new highs will be open! Support levels are $240 (just above the 50-day MA) and March lows of $230.

MICROSOFTDaily.png

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