Microchip Technology + ASML > Nvidia - Is it a better pick for investors?
Hello guys, as you all probably know, Nvidia stock plummeted over the past few days, but it recovered a bit, however it shows you not to buy the most popular stock there is. I for example, own ASML only right now from semiconductor stocks.
Here is Nvidia’s chart:
I’m down 2% right now, but it doens’t matter.
I found a stock many of you might not have heard of before: MCHP, which makes general purpose 8-bit, 16-bit, and 32-bit mixed-signal microcontrollers, and also other kinds of computer chips, including analog, interface, mixed signal, and timing products comprising power management, which means that for future markets, like home automation, or even McDonald’s automation byu robots it would be necessary for the producers to use those kind of chips.
While having a market share of 5.22%, doesn’t sound like it fits into the “Monopolistic” category, that might be right, but they are in the top 5 producers of MCUs in the world:
NXP
Microchip Technology
Renesas
Infineon
STMicroelectronics
Their revenue has been growing very well, although in the past three quarters, it has been in decline.However, their dividend growth is still absolutely massive. They are offering a 2.03% dividend yield.
Howver, in their earnings call, they also mention that the decline in revenue is due to the cyclicality of the market, and not weaknesses in the company itself. Their profit margin of 25% is a very good sign as well. However someone might argue that Nvidia’s profit margin of 53.5% is better. Well, if you want a company which is less predictable, buy Nvidia. The company has $31.44 billion in cash and $10.99 billion in debt, showing that it’s a very safe investment in my opinion.
Look at the compared to other semiconductor stiocks: They have a bigger profit margin than 7 of these companies!
Overall, I think that this can be a very good long term investment. They also recently bought an AI software company called Neuronix AI Labs, which specializes in neural network sparsity optimization technology for AI applications on Field Programmable Gate Arrays (FPGAs), which are some sort of electronic circuit board.
If consider buying ANY semiconductor stocks, I think the best ones are ASML and MCHP.
Simplywall.st’s valuation:
Do your own research. This isn’t financial advice.