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Credit Suisse Is 'Most Positive' On Micron Following Semiconductor Conference

AMAT, AMZN, BIDU, CDNS, CSCO, GOOG, INTC, KLAC, LRCX, MSFT, NVDA | August 29, 2017

After attending the recent Hot Chips 2017 conference, Credit Suisse analyst John Pitzer has named Credit Suisse’s hottest chip stocks to own: Micron Technology, Inc. (NASDAQ: MU) and Xilinx, Inc. (NASDAQ: XLNX). According to Pitzer, all the key long-term semiconductor drivers are still in place, and there are huge growth opportunities for investors.

Data center accelerator growth and artificial intelligence were key themes at the event, and Pitzer sees major demand for a wide range of products for years to come.

“Importantly, we expect growth in all architectural platforms including: CPUs, GPUs, FPGAs, and ASICs, especially as the declining cost of Analytics drives compute elasticity,” he wrote.

Credit Suisse expects that AI will expand the total addressable market for Server Processors by up to 100 percent, creating major tailwinds in the semiconductor industry.

The explosive growth in the size of datasets makes memory a particularly hot market. Credit Suisse is calling for 25 to 30 percent DRAM bit growth in the long-term, more than double industry growth projections.

In the chip business, Credit Suisse was “most positive” on Micron and Xilinx. Micron should benefit from the “de-commotization” of memory, while Xilinx should get a boost from a reacceleration of field-programmable gate array demand.

From an SCE/EDA standpoint, Pitzer is most bullish on Lam Research Corporation (NASDAQ: LRCX) and Applied Materials, Inc. (NASDAQ: AMAT) due to their higher exposure to the memory market.

Credit Suisse maintains Outperform ratings on Micron, Xilinx, Lam Research and Applied Materials.

In addition, the firm has Outperform ratings on these other names in the semiconductor space: