TXN - Applied Materials lead chips higher as sector reacts to bank backstops

2023-03-13 12:09:52 ET

Applied Materials ( NASDAQ: AMAT ) led semiconductor stocks higher on Monday as investors assessed the latest moves by the U.S. government to backstop financial institutions amid worries over a bank run.

Applied Materials ( AMAT ) tacked on 1.8% after the company announced a 23% increase in its quarterly dividend and a new $10B share buyback program.

Applied Materials ( AMAT ) is now paying 32 cents per share declares, with the next payment to shareholders of record as of May 25 on June 15.

The new buyback program replaces an existing program, which had $4.7B left at the end of the first-quarter.

Lam Research ( NASDAQ: LRCX ) erased earlier losses as investment firm Bernstein downgraded the semiconductor capital equipment company, citing valuation concerns.

"[Lam Research] is more expensive, and it has been near our Target price for some time; given we believe there remains considerable uncertainty around memory it feels prudent to move to the sidelines for now though we continue to like the longer term story," analyst Stacy Rasgon wrote in an investor note.

KLA Corp. ( KLAC ) and ASML Holding ( ASML ), which also make semiconductor equipment, rose 0.4% and 1.3%, respectively.

Nvidia ( NASDAQ: NVDA ) shares rose nearly 1% after Microsoft ( MSFT ) unveiled a new virtual machine using the company's H100 GPUs and Citi said it was among the chip stocks to own.

Analyst Christopher Danely noted that investor sentiment for the sector as a whole is slightly bullish but it's more bullish on individual names as "many bears [are] raising the white flag," highlighting Nvidia ( NVDA ), AMD ( AMD ), Microchip Technology ( MCHP ) and semiconductor equipment companies.

"We believe there is a lot of FOMO out there, where bears are giving up and chasing stocks which lead to short squeezes," Danely wrote in an investor note, adding that much of the bear thesis is centered on a strong second-half outlook outlaid by companies.

AMD ( AMD ) shares rose 1.3%, while Microchip ( MCHP ) tacked on 0.9%.

Qualcomm ( NASDAQ: QCOM ) shares rose nearly 0.8% as the company looks to overturn a $258M antitrust fine placed on the company by the European Commission.

Other chip stocks also gained on Monday, including Texas Instruments ( TXN ), Qorvo ( QRVO ), Skyworks Solutions ( SWKS ), among others.

On Friday, it was reported that the Biden Administration may place new restrictions on technology and products that can be sold to Chinese companies, potentially impacting Applied Materials ( AMAT ) and other chip companies .

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