Semiconductor stocks are looking more attractive following a sell-off this year, a Wall Street firm said Tuesday. Brokerage firm Piper Sandler said it is taking a "more positive stance" on the sector and upgraded AMD stock to buy.
"While we are not trying to call the bottom, we believe investors should be buying semiconductor stocks at current levels," Piper analyst Harsh Kumar said in a note to clients.
He added, "We are moving to a more positive stance on semiconductor stocks following our more cautious approach since the beginning of the year."
Kumar highlighted five semiconductor stocks as "top picks." They are Advanced Micro Devices, Impinj, Marvell Technology, Onsemi and Qualcomm.
AMD Stock Receives Upgrade
Kumar upgraded AMD stock to overweight, or buy, from neutral and raised his price target to 140 from 98.
On the stock market today, AMD stock rose 8.7% to close at 102.47. Meanwhile, Impinj advanced 2.3% to 47.24. Marvell increased 5.5% to 58.28. Onsemi climbed 6.1% to 58.50. And Qualcomm rose 4.3% to 139.69.
The Philadelphia semiconductor index, known as SOX, jumped 5% on Tuesday. For the year, it is still down 22.3%. The SOX contains the 30 largest semiconductor stocks traded in the U.S.
Semiconductor stocks have fallen this year amid concerns that the uptrend in the chip cycle is nearing an end.
Catalysts For AMD Shares
Kumar said he likes AMD stock for its mid- to long-term catalysts. Those catalysts include strong server trends and its Xilinx acquisition boosting its data center business. He also sees commercial PC sales offsetting a slowdown in consumer PC sales.
"The company's core businesses are running really well and continue to benefit from secular trends," Kumar said.
AMD stock ranks fifth out of 34 stocks in IBD's fabless semiconductor industry group, according to IBD Stock Checkup. It has an IBD Composite Rating of 86 out of 99.
IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
