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Jim Cramer: 'Old-School' Chip Stocks Like Intel Poised to Skyrocket

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By    |   Wednesday, 03 October 2018 02:21 PM

Investment guru Jim Cramer predicts that “old-school” semiconductor stocks like Intel poised to surge despite a recent dip in the industry’s share prices.

“Neglected old-school semiconductor kingpins like Intel and Texas Instruments could be ready to roar, while some of the newer, faster-growing names like Broadcom and Nvidia might need to take some time to digest their gains before they resume their long march higher,” the “Mad Money” host recently said on CNBC.

“Lately, the chip stocks have become a lot more inconsistent — some big winners, some big losers — leaving the broader group kind of, let’s say, directionless,” the “Mad Money” host said on CNBC.

Cramer recruited Carolyn Boroden, the technician behind FibonacciQueen.com and his colleague at RealMoney.com, to take a closer look at the charts of four major chipmakers: Nvidia (NVDA), Intel (INTC), Texas Instruments (TXN) and Broadcom (AVGO).

Their verdicts:

It’s probably too late to buy Nvidia (NVDA), with a share price flirting with $300. “Boroden says that if you’re not already in this one, you’re probably a little late to the party,” Cramer said. “While (Boroden) could see it rallying another $10 bucks or even $11 bucks from here, that’s not a lot of upside,” Crmaer continued. “As much as I love Nvidia’s business, you’re chasing it if you buy the stock up here and we hate to chase.”

For Intel (INTC), most signs point to a price spike. Boroden pinpointed a key floor of support at $42 a share, well below Intel’s current price. She added that if the stock clears the $49 level, it could climb to over $61.

For Texas Instruments (TXN), Boroden said that if the stock price can hold above $102 a share, it could see gains up to the $122 level. If it dips below $102, though, it could fall as low as $94 before bouncing back.

“At the moment, though, the future’s looking good for TXN,” Cramer said. “The year’s been quite good for the company.”

Boroden felt a bit more wary of Broadcom (AVGO) after its stock’s recent surge. She noted that its ceiling of resistance was at $251, up about $3 from the stock’s current price, but said if Broadcom could push past it, there could be a lot more upside.

“Specifically, Boroden thinks this stock could run to $309 before it hits another ceiling,” Cramer said.

Meanwhile, Morgan Stanley took another swipe at semiconductors on Wednesday, with an analyst cutting his earnings estimates for the first time in three years to reflect what he sees “as the start of an inventory correction,” Bloomberg reported.

While the pressure will probably be felt most in autos and industrials, normalizing lead times will likely be a trigger for the entire industry, analyst Craig Hettenbach wrote in a research note.

He lowered his estimates for the fourth quarter and 2019, leading to a reduction in price targets for seven stocks, including Qorvo Inc., Microchip Technology Inc. and TE Connectivity Ltd.

The cuts could add pressure to a group that has seen an increasing amount of bearish sentiment in recent weeks. After Morgan Stanley downgraded the sector in early August, several banks have piled on with cautious takes from Raymond James to Goldman Sachs and Stifel Nicolaus.

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Investment guru Jim Cramer predicts that “old-school” semiconductor stocks like Intel poised to surge despite a recent dip in the industry’s share prices.
jim cramer, old, school, chip, stocks, intel
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2018-21-03
Wednesday, 03 October 2018 02:21 PM
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