The semiconductor sector recorded a big gain last week, led by industry giants Nvidia, ASML and TSMC. However, investment bank Jefferies is keeping an eye on two lesser-known semiconductor stocks, Aixtron and Ams Osram, which it believes could rise by more than 100%. The SOX Semiconductor Index rose about 10% last week after a tough summer, boosted by positive comments from Nvidia CEO Jensen Huang about demand for the company’s latest artificial intelligence chip, Blackwell. At a Goldman Sachs conference on September 11, Huang said, “The demand is so great that our parts, technology, infrastructure and software offerings are really inspiring for people,” sparking optimism across the sector. So far this week, the SOX Index is down about 1.4%. Looking ahead, Jefferies analysts pointed to the continued recovery of the semiconductor industry, with global chip sales growth accelerating to 18.7% year-over-year in July. Analysts expect this growth to continue, potentially peaking at 30-35% by mid-2025. “AI-enabled smartphones, recovery in commodity server demand, improving PC demand, and further price increases for DRAM and NAND flash are some of the factors likely to drive further cycle strength through 2024 and 2025,” Jefferies analysts led by Janardhan Menon said in a Sept. 13 client note. “In tandem with these trends, we expect a combination of revaluations and earnings momentum to drive stocks higher over the next 12-15 months. We therefore recommend an overweight position in the sector.” Aixtron According to Jefferies, Aixtron, a Germany-based provider of manufacturing equipment to the semiconductor industry, was “misguidedly” influenced by news that peer Infineon had made a breakthrough in its latest 300-millimeter wafer technology. Infineon, also based in Germany, said last week that its latest developments would allow it to produce 2.3 times more chips per wafer. The power chip is targeted for use in AI data centers and electric vehicles. But Jefferies sees Aixtron maintaining its market dominance, acknowledging that the company is currently researching and developing a 300-millimeter gallium nitride tool. “We therefore do not believe Aixtron has lost business at IFX to competitors and expect the company to remain a key supplier of Infineon’s MOCVD machines as it transitions to HVP over the next 2-3 years,” the investment bank’s analysts said. Jefferies expects Aixtron’s shares to rise 115% over the next 12 months to 35 euros ($38.80) a share. The stock is also traded in the U.S. AIXXF 1Y Line Ams OSRAM Austrian-German semiconductor company Ams OSRAM recently completed a 200 million euro ($222.73 million) senior bond offering with a coupon yield of 10.5%, replacing other short-term debt maturing in 2024. With the debt consolidation, Jefferies expects the company’s operating margins and cash flows to rise steadily from the second half of 2024 and over the next few years, positioning it for strong growth. “The next major refinancing outstanding is therefore the €760 million convertible bond due in 2027, which is still some way off,” the analysts added. The analysts expect Ams OSRAM’s shares, listed on the SIX Swiss Exchange, to rise 179% over the next 12 months to CHF2.4 ($2.83). The shares also trade over the counter in the United States.
Jefferies analysts say semiconductor stocks are worth buying as they could rise by over 100%
By NvidiaDaily
