© Reuters Advanced Micro Devices (AMD) stock is a new 2023 Top Pick at Morgan Stanley
By Senad Karaahmetovic
Morgan Stanley analysts promoted Advanced Micro Devices (NASDAQ:) stock to top chip stock to own in 2023, replacing Lam Research (NASDAQ:).
The analysts highlighted a near-50% rally in LRCX shares in the past 2 months, meaning the risk/reward is more balanced now. On the other hand, AMD “remains the worst performing stock in large cap despite the fact that their server roadmap demonstrably improved its technology leadership position over the course of the year,” they said in a client note.
Overall, the analysts expect the semi sector to experience a 10% revenue decline in 2023 due to soaring inventory in 2022.
“Directional weakness is understood but we still see downside to consensus for most names,” they said.
The 2023 year will be “challenging” for chip stocks, especially after the recent relief rally, which leaves the analysts “somewhat cautious.” The rally seems “premature” with most stocks still having a downside in them.
Some names, like NVIDIA (NASDAQ:) have already priced in a strong correction. While the analysts are generally positive on AMD, Qualcomm (NASDAQ:), and LRCX, these “likely have more downward revisions coming in the shorter term.”
Here are their top stocks to own per sector:
Compute – AMD, NVDA, Marvell (NASDAQ:);
Smartphone – QCOM;
Analog – Microchip (NASDAQ:); NXP (NASDAQ:), Analog Devices (NASDAQ:), Texas Instruments (NASDAQ:);
Automotive – QCOM, Ambarella (NASDAQ:), Wolfspeed (NYSE:), ON Semi (NASDAQ:), ADI, NXPI;
Memory – Cautious outlook. Prefer Western Digital (NASDAQ:) to Micron (NASDAQ:);
As far as semi-cap names are concerned, they highlight LRCX and GlobalFoundries Inc (NASDAQ:).
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