Semiconductor Watchlist: Cramer Says Keep an Eye on Applied Materials

IBM  (IBM) - Get Report said this past week that it has developed a microchip with 2-nanometer transistors, a move that could lead to better-performing phones and computers. The smaller transistors enable faster calculations using less power, the company said in a statement.

“When we experience that the phone gets better, the cars get better, the computers get better, it is because behind the scenes, the transistor got better and we have more transistors available in our chips,” Gil added.

IBM does not make chips but rather licenses its technology to companies that do, Dow Jones reports. Such companies include Intel  (INTC) - Get Report, which is likely to begin using the 2-nanometer chips in a matter of years, media reports say.

"The entire semiconductor supply chain is very, very tight. I think you hear that from all of our peers in the marketplace," Advanced Micro Devices  (AMD) - Get Report CEO Lisa Su recently told investors on a conference call.

It’s clear that Intel is struggling against AMD and Nvidia  (NVDA) - Get Report, the latter of which recently had an impressive rally to new highs after its GTC conference, wrote TheStreet's Bret Kenwell.

"I don't want to own Intel because it's falling behind AMD. AMD is ahead in manufacturing, and semiconductors are a manufacturing business," said Jim Cramer.

Cramer also said on Morning Bell with Jim Cramer Monday that all the semiconductor producers are just completely going full out just where there is a dramatic decline in [demand] or when they pass equilibrium.

"That's why they are selling all these semiconductor stocks ahead of what they believe is going to be a semiconductor glut," Cramer said.

But, Cramer wants investors to eye Applied Materials  (AMAT) - Get Report when it reports earnings later this week.

For more in-depth coverage of the semiconductor sector including trading recommendations and investment strategies, follow Eric Jhonsa on Real Money.

Here is a list of the semiconductor stocks to watch and their performance by percentage change at the close of trading on Tuesday, May 18:

Nvidia Corp | -2.03% 5-Day

Nvidia  (NVDA) - Get Report shares rose earlier this month after Baird analyst Tristan Gerra initiated coverage of the semiconductor superstar with an outperform rating and $800 price target.

“Nvidia is poised to dominate [artificial intelligence] computing, the most transformational technology of our era,” Gerra wrote in a commentary.

Jim Cramer said on Mad Money Monday that Investors looking for deals that make sense should consider Nvidia and that Nvidia needs ARM to break into portable devices.

TheStreet Quant Ratings rates Nvidia as a Buy with a rating score of B.

Qualcomm | +0.42% 5-Day

Shares of Qualcomm  (QCOM) - Get Report and other Apple  (AAPL) - Get Report suppliers were dropping Monday after a media report said Apple's 5G baseband chip could be used in the iPhone as soon as 2023.

AppleInsider cited TF International Securities analyst Ming-Chi Kuo as the person making its prediction. Kuo sees Qualcomm having to change its strategy to combat order losses from Apple. 

Jim Cramer recently said investors should "own Qualcomm stock."

TheStreet Quant Ratings rates Qualcomm as a Buy with a rating score of B.

NXP Semiconductors | -0.67% 5-Day

NXP Semiconductors  (NXPI) - Get Report swung to a stronger-than-expected first-quarter profit from a year-earlier loss on 27% higher revenue.

The Eindhoven, Netherlands, chipmaker reported that it earned $1.25 a share compared with a loss of 8 cents a share in the year-earlier quarter. Revenue reached $2.57 billion from $2.02 billion.

TheStreet Quant Ratings rates NXP Semiconductors as a Buy with a rating score of B-.

Advanced Micro Devices | -3.11% 5-Day

Advanced Micro Devices  (AMD) - Get Report announced Monday that the company's president and CEO Dr. Lisa Su will provide a keynote presentation at the J.P. Morgan 49th Annual Global Technology, Media and Communications Conference on Monday, May 24, 2021.

The chipmaker had solid pre-market gains this past week, but Jim Cramer said on Mad Money Monday that AMD desperately needs Xilinx  (XLNX) - Get Report to diversify its portfolio.

"All right, let's deal head-on with a problem, one that's even a problem today. A real problem -- Advanced Micro Devices. Now because it has so much business in plain old PCs, it's been selling down, as PCs, especially notebooks, which are down 9% in sales, are work-from-home, stay-at-home. And that's a definite nonstarter, as I told you," Cramer said. 

"But AMD is buying Xilinx, and when that deal closes PCs will be a much smaller part of the company than now, and that will allow it to have an up in 2022 of, perhaps, major league proportions," he added.

TheStreet Quant Ratings rates AMD as a Buy with a rating score of B.

Intel | -0.36% 5-Day

Intel  (INTC) - Get Report shares slumped lower this past week after the chipmaker recently hinted that investments in new manufacturing foundries would likely pressure near-term profit margins, clouding the impact of its first-quarter earnings beat.

Intel, despite what the company keeps saying, is nowhere, according to Cramer.

"Yes, it bothers me right now that the stock is down a buck. Yes! It's killing me! And Intel keeps saying that they're going to pass AMD any minute. That's nonsense," Cramer said.

TheStreet Quant Ratings rates Intel as a Buy with a rating score of A-.

Taiwan Semiconductor Manufacturing | -1.78% 5-Day

Cramer said this past week that if investors think chips are truly in short supply and we need capital equipment, then the company they most need is Lam Research  (LRCX) - Get Report, other than Taiwan Semiconductor Manufacturing  (TSM) - Get Report.

Cramer spoke recently about picking stocks against a broad worldview, and Taiwan Semiconductors was discussed.

"For me, I'm particularly concerned about the Chinese making a move on Taiwan. We're squeezing their critical companies to the de facto takeover of Taiwan Semiconductor. I don't want inflation to be so raging that Jay Powell can't engineer a soft landing," Cramer said.

TheStreet Quant Ratings rates TSM as a Buy with a rating score of A.

Micron Technology | -2.23% 5-Day

Micron Technology  (MU) - Get Report announced Monday the successful closing of nearly $3.7 billion inaugural sustainability-linked credit facilities. 

The facilities, which create additional long-term value for Micron's stakeholders, reinforce the company's commitment to sustainability and 2030 environmental goals.

TheStreet Quant Ratings rates Micron as a Buy with a rating score of B.

Texas Instruments | -2.36% 5-Day

Chipmaker Texas Instruments  (TXN) - Get Report reported first-quarter revenue and earnings that topped analyst estimates, as well as strong second-quarter guidance.

The company reported first-quarter revenue of $4.29 billion vs. the analyst consensus of $4.00 billion, while adjusted earnings came in at $1.87 per share versus consensus estimates for $1.58 per share. Operating income for the quarter was $1.94 billion vs. consensus estimates of $1.71 billion.

TheStreet Quant Ratings rates Texas Instruments as a Buy with a rating score of A.

Applied Materials | -1.74% 5-Day

Applied Materials  (AMAT) - Get Report Monday outperformed competitors in trading, even as the stock declined. The company is expected to report earnings this week.

Cramer said he doesn't think Applied Materials has peaked because the semiconductor world is still on fire.  

"There are a lot of people who feel that what's happened is that these companies got so many orders that they are going to wipe themselves out," he said.

TheStreet Quant Ratings rates Applied Materials as a Buy with a rating score of A-.

AMD, Broadcom, and Nvidia are key holdings in Jim Cramer's Action Alerts PLUS charitable trust. Want to be alerted before Jim Cramer buys or sells any stock? Learn more from Cramer and his membership team now.