Moreover, innovation in the chipmaking process and manufacturing of advanced chips should foster the industry’s growth. Growing investor optimism in this space is evident in the SPDR S&P Semiconductor ETF’s (XSD) 1.2% gains over the past month, versus the SPDR S&P 500 Trust ETF’s (SPY) negative returns. The global semiconductor market is expected to grow at a 7.7% CAGR to $778 billion by 2026. As a result, fundamentally-sound large-cap stocks Taiwan Semiconductor Manufacturing Company Limited (TSM) and Applied Materials, Inc. (AMAT) should benefit substantially.
However, given the current challenges faced by the industry and ongoing market volatility, overvalued stocks in this space, NVIDIA Corporation (NASDAQ:NVDA) and Advanced Micro Devices, Inc. (AMD), will likely remain under pressure in the near term.