Buy the Winners of the Chip Shortage Story

Supply chain disruptions suggest that shortages for many goods will continue potentially indefinitely. However, a number of tech executives see a light at the end of the tunnel, with the shortage of semiconductor chips abating next year.

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  • The most recent to comment has been Lisa Su, the CEO of Advanced Micro Devices (AMD). She has noted that demand has been at record levels since the pandemic.

    Su reiterated that the company is continuing to get more chips into the hands of users, particularly for its core business and the gaming industry. That’s one reason why the company has been one of the winners of the past year, and is likely to continue to do so.

    AMD has now slightly underperformed the stock market over the past year, with shares pulling back from highs a few months ago. But with revenue nearly double and earnings up over 350 percent, there’s more room for the company to run.

    Action to take: Investors may like shares at a long-term holding, although they don’t pay a dividend.

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  • With shares moving higher again, traders may like a call option trade.  The January $120 calls, last going for about $5.55, may not move in-the-money in the next few months, but the trade is inexpensive enough to deliver high-double to low-triple-digit returns.

     

    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.