Conflict
The BofA Securities team said this about risks and alternatives to Taiwan Semiconductor:
While there is no ready substitute for Taiwan and TSMC, and any regional conflict would be negative for all chip stocks, we do believe just that persistent threat could drive more market share and US/EU government subsidies towards the competition.
Based in New York, GlobalFoundries Inc. (NASDAQ: GFS) could be the go-to company if the United States and China have geopolitical skirmishes. It is the fourth largest outsourced semiconductor manufacturer (aka foundry) and is the last remaining U.S.-based pure-play foundry at this time.
GlobalFoundries manufactures complex, featureich ICs addressing mission-critical applications in smart mobile devices, personal computing, communication infrastructure and data center, home and industrial Internet of Things (IoT) and automotive markets.
The BofA team sees sales growth for the company in 2023 and reiterated recently that the company is uniquely positioned to capture market/investor share, as the only scale foundry without a China/Taiwan footprint.
GlobalFoundries stock on the BofA Securities US 1 list of top stock picks. The firm recently raised its $75 target price to $80, well above the $70.14 consensus target. Tuesday’s close was at $66.58 a share.
Making a big purchase in the sector now still would be fraught with risks. The BofA Securities analysts are clear that they think next year and beyond is when the tide can turn in a big way. In addition, there is a very good chance that the recent stock market rally is nothing more than a bear market short-covering move. With that caveat in place, for aggressive growth investors it makes sense to nibble on some of these top ideas now, while leaving plenty of dry powder in case the market takes another big leg down, which is entirely possible.
Originally published at 24/7 Wall St.
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