Benzinga
Published Jan 03, 2024 19:12
Updated Jan 03, 2024 20:40
Chip Stocks At 'Premium Valuations': Why Bank Of America Is Bullish On Semiconductors In 2024
Benzinga - by Neil Dennis, Benzinga Staff Writer.
Semiconductor stocks have fallen in the first two trading sessions of 2024. Is this a sign of a strained market with valuations running too hot and prompting investors to take profits?
Bank of America said it remained bullish on the Philadelphia Semiconductor Index (SOX) for 2024, despite its 65% gain in 2023.
The iShares Semiconductor ETF (NYSE:SOXX), an exchange traded fund that tracks the Philly Semiconductor Index, fell 5.4% over the past two sessions but, like the index it tracks, was up 65% in 2023.
“The key question for investors,” said BofA analyst Vivek Arya, “is whether 2024 will bring more of the same, or rotation into last year’s laggards.”
Also Read: A Glitch In The Rally? Cruise Operators And Chip Stocks Targeted In Profit Taking
The chart below shows that since 1995, the index exceeded 35% annual gains 10 times and delivered double-digit gains following six of those.
Arya concluded secular tailwinds persisted: “Continued adoption and investment in AI infrastructure, growing chip design complexity, automotive semiconductor content proliferation and government focus on silicon independence will continue to drive the sector in 2024.”
Now Read: Oil Investing In 2024: 4 ETFs To Consider For Backing Or Hedging Prices
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