Why shares of Applied Materials, ASML Holding and Taiwan Semiconductor rose on Wednesday

Wednesday looks set to be a good day for semiconductor investors, as good news from China (and the potential for a cash grab in Taiwan) is lifting the stock prices of semiconductor companies. Applied materials (NASDAQ:AMAT), ASML Holdings (Nasdaq: ASML)And Taiwan Semiconductor Manufacturing Company (NYSE: TSM).

As of 10:30 a.m. ET, Applied Materials stock was up 4.9% and ASML was up 7.4%. TSMC rebounded from yesterday’s decline with a 6.9% gain today.

Good news for semiconductor equipment stocks

Starting at the top of the supply chain, applied materials He won the promotion from Barclays This morning. As analyst Tom O’Malley explained, he sees a “strong uptick” in orders for foreign semiconductor manufacturing equipment in China, as that country spends big to become self-sufficient in chip manufacturing. Meanwhile, O’Malley expects semiconductor companies to spend “heavily” on capital investment in the United States while receiving subsidies from the United States. US chip law.

What’s good for Applied Materials must be good for rival ASML – so both stocks are rising in tandem this morning.

Barclays also boosted TSMC shares today, raising their price target on the overweight stock to $170. The analyst highlighted demand for 2nm chips as a “very, very big” earnings driver for TSMC (as well as a catalyst for spending on chip manufacturing equipment). This news comes on the heels of a report released yesterday that TSMC may raise prices on its chip manufacturing contracts – to try to get a bigger share of the big profits it generates. Nvidia (Nasdaq: NVDA) AI chips have been extracted.

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Which semiconductor stocks should you buy?

And so we have three solid stocks to consider today. Any one would I He buys?

None of the three look cheap, with TSMC stock costing nearly 30 times earnings, Applied Materials 24 times, and ASML stock twice that – 48 times trailing earnings. Of the three companies, TSMC has the fastest growth rate of just over 20%, giving it a PEG ratio of 1.5, versus a PEG of 2.4 for both Applied Materials and ASML.

This puts TSMC the closest to a ‘buy’.

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Rich Smith He has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML, Applied Materials, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Barclays Plc. The Motley Fool has Disclosure policy.

Why shares of Applied Materials, ASML Holding and Taiwan Semiconductor rose on Wednesday Originally published by The Motley Fool

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