Semiconductor and chip manufacturing companies like Intel Corporation (NASDAQ:INTC) and Broadcom Corporation (NASDAQ:BRCM) whose stocks have been on a rise for a month now however these stocks seem to be in a dangerous territory.
Seema Mody of CNBC was reporting on the movement and position of the Semiconductor stocks and she said that these companies that power all the smartphones, PCs and with their chips and memory devices have seen growth so far this year. The sector is up above 17% so far this year.
However she said, some of the market players believe that stocks like Intel Corporation (NASDAQ:INTC) and Broadcom Corporation (NASDAQ:BRCM) due for a pause. The index for these stocks has seen its first weekly decline is 9 weeks. Technical analysts and the MPM partners say that there might be further consolidation as the semis are the most overbought they’ve been since the tech bubble since 2000.
Goldman Sachs Group Inc (NYSE:GS) also seems cautious writing that semis stocks are trading in “dangerous territory”. However some analysts see further gains; B. Riley analyst Craig Ellis told Mody that the fundamental story for chips remains favorable, all thanks to the adoption of smartphones in emerging markets and the lure of the dividends some of these stocks such as Intel Corporation (NASDAQ:INTC) and Broadcom Corporation (NASDAQ:BRCM) paid. Ellis also said that if the average dividend yield of semis is in line with the s&p 500 at around 2% and if the rates of the chips stay low for some time, it might be favorable to the semis stocks like as Intel Corporation (NASDAQ:INTC) and Broadcom Corporation (NASDAQ:BRCM).
Brookside Capital owns about 8.3 million shares in Broadcom Corporation (NASDAQ:BRCM) and Highfields Capital Management is another key investor in the company with over 6.3 million shares. Harris Associates and First Eagle Investment Management are key investors in Intel Corporation (NASDAQ:INTC) with 66.8 and 38.2 million shares respectively. Coming week would be critical for these stocks.