Skip to headerSkip to main contentSkip to footer
Get our Free E-newslettersGet our Free E-newsletters
Kiplinger logoLink to homepage
Get our Free E-newslettersGet our Free E-newsletters
Subscribe to Kiplinger
Subscribe to Kiplinger
Save up to 76%
Subscribe
Subscribe to Kiplinger
  • Store
  • Home
  • Investing
  • Retirement
  • Taxes
  • Personal Finance
  • Your Business
  • Wealth Creation
  • More
    • Podcasts
    • Economic Outlooks
    • Tools
  • My Kiplinger
    • Kiplinger's Personal Finance Magazine
    • The Kiplinger Letter
    • The Kiplinger Tax Letter
    • Kiplinger's Investing for Income
    • Kiplinger's Retirement Report
    • Store
    • Manage My E-Newsletters
    • My Subscriptions
  • Home
  • investing
investing

Silicon Valley's Best Chip Stocks of the Bull Market

Semiconductors are synonymous with Silicon Valley.

by: Dan Burrows
October 17, 2017
SANTA CLARA, CA - March 12:This handout image from Intel Corp. shows a die shot of the Centrino processor chip released by Intel on March 12, 2003 in Santa Clara, California. According to Int

Getty Images

Semiconductors are synonymous with Silicon Valley. Chip makers started popping up at the southern end of San Francisco Bay as early as the 1950s. A big draw back then as now: Stanford University and its bevy of researchers and research facilities. Today, seven of the biggest publicly traded semiconductor companies still call Silicon Valley home, with headquarters in such tech-friendly California cities as Santa Clara and San Jose.

Despite the steady decline in computer sales in recent years -- semiconductors are the brains inside PCs -- all seven of these chip stocks have performed well during the current long-running bull market. In fact, six of the seven have handily outpaced the 348% total return (including dividends) of Standard & Poor’s 500-stock index since March 9, 2009. The seventh isn't far behind.

But some Silicon Valley chip stocks have performed significantly better than others over the past eight-and-a-half years. Four of the seven have even beaten the remarkable 530% total return of the Nasdaq-100 Index, which is made up of the largest non-financial stocks listed on the Nasdaq Stock Market by market capitalization. Check out Silicon Valley's best semiconductor stocks of the bull market.

  • 25 Dividend Stocks You Can Buy and Hold Forever
Return data provided by S&P Global Market Intelligence. Prices and returns as of Oct. 13, 2017. Due to the multiple share classes issued by some companies, the Nasdaq-100 Index currently consists of 107 stocks. Market capitalization represents share price multiplied by the number of shares outstanding. The seven stocks on this list, which represent the seven semiconductor companies included in the Nasdaq-100 that are headquartered in Silicon Valley, are listed in order of total returns during the current bull market, from lowest percentage return to highest.

1 of 7

Intel

SAN FRANCISCO, CA - JUNE 26: In this handout photo provided by Intel, Tom Kilroy, vice president of Intel?s Digital Enterprise Group, displays Intel's new Dual-Core Xeon Processor 5100 on Jun

Getty Images

  • Ticker symbol: INTC
  • Share price: $39.67
  • Bull market return: 317%
  • Dividend yield: 2.8%
  • Headquarters: Santa Clara, Calif.

Intel is the old-timer of Silicon Valley. The company was founded in 1968 and held its initial public offering in 1971. But Intel’s longevity is a big reason it’s one of the greatest tech stocks of all time. Through the end of 2016, the stock has generated a staggering $259 billion in lifetime wealth for its shareholders, according to stock research conducted by Hendrik Bessembinder, a finance professor at Arizona State University. Returns have been leaner during the current bull market as declining demand for PCs has hurt demand for Intel’s semiconductors. That has forced Intel, the world's largest maker of the central processing units that serve as a PC's brain, to find new ways to generate revenue growth. The expansion of cloud-based services has been a boon, thanks to its dominance of the market for server chips. Analysts at Credit Suisse think Intel is well-positioned for the long term because of its scale and investments in research and development.

 

  • 12 Dividend Aristocrat Stocks to Earn Income All Year Long

2 of 7

Xilinx

Linear Technology

  • Ticker symbol: XLNX
  • Share price: $72.81
  • Bull market return: 421%
  • Dividend yield: 1.9%
  • Headquarters: San Jose, Calif.

Founded in 1984, Xilinx is another longtime denizen of Silicon Valley in the chip business that hasn't pulled its weight through the current bull market. Shares trail the Nasdaq-100 Index by 109 percentage points even after accounting for dividends. A change in the landscape promises better times ahead for the maker of programmable chip technology. Although Xilinx faces tough competition from Intel, investors are excited about the payoff from selling chips to Amazon.com’s (AMZN) thriving cloud-computing business, Amazon Web Services. And the boom in data centers beyond Amazon offers additional avenues of growth.

 

  • 3 Great Growth Stocks that Aren't FAANGs

3 of 7

Maxim Integrated Products

Maxim Integrated Products

  • Ticker symbol: MXIM
  • Share price: $48.42
  • Bull market return: 489%
  • Dividend yield: 3.1%
  • Headquarters: San Jose, Calif.

It's been steady as she goes for Maxim Integrated Products' stock for much of the bull market, thanks in part to the inexorable rise of digital mobile devices. Among other areas of operation, the company, founded in 1983, supplies chips to smartphone giants Apple and Samsung. That leaves it exposed to risk if either of those partners were to have a change of plans. But Stifel analysts say the company's ongoing diversification efforts give it multiple opportunities for growth without becoming too dependent on a single customer. So while it’s hard to imagine consumers abandoning their iPhone and Galaxy smartphones in droves, Maxim should be safe if they do since it depends on neither Apple nor Samsung for more than 10% of its overall business.

 

  • 25 Surprising Stocks Raising Dividends for 25 Years or More

4 of 7

Applied Materials

Business Wire

  • Ticker symbol: AMAT
  • Share price: $53.94
  • Bull market return: 654%
  • Dividend yield: 0.7%
  • Headquarters: Santa Clara, Calif.

Wall Street is increasingly bullish on Applied Materials. Of the 14 analysts covering the stock tracked by Zacks, 10 call it a "Strong Buy," two have it a "Buy," and two have it "Hold." There are no “Sell” ratings. It's easy to see where the optimism comes from. Applied Materials' core business of semiconductor equipment and services benefits from today's trends. The rise of artificial intelligence, cloud computing, the Internet of Things, mobile devices and Big Data are driving increased demand for chips. As a supplier to the companies that make the chips powering all these technologies, Applied Materials finds itself in an enviable position. The company also supplies products for making displays for TVs, tablets, computers and smartphones. And don’t be fooled into thinking of Applied Materials as a relative newcomer to Silicon Valley. It was founded in Mountain View, Calif., in 1967 – a year before Intel.

 

5 of 7

Lam Research

Lam Research

  • Ticker symbol: LRCX
  • Share price: $189.90
  • Bull market return: 938%
  • Dividend yield: 1.0%
  • Headquarters: Fremont, Calif.

Shares of Lam Research have seen some ups and down along the way, but the bottom line is that this supplier of equipment to chip makers delivered outsized total stock returns since the bull market began. Analysts at Zacks Equity Research note that the company continued its impressive earnings momentum with another better-than-expected profit beat in its most recent quarter. Furthermore, analysts are raising their profit estimates. Of the 13 analysts covering the stock polled by Zacks, 9 have Lam at "Strong Buy," two call it a "Buy" and two rate it at "Hold." Lam got its start in Santa Clara in 1980, making it one of the early players in the lucrative Silicon Valley semiconductor industry.

 

  • Best Stock in Every State to Buy Now

6 of 7

KLA-Tencor

MILPITAS, CA - OCTOBER 21:A sign is posted in front of the KLA-Tencor headquarters on October 21, 2015 in Milpitas, California.Chipmaker Lam Research announced plans to acquire KLA-Tencor for

Getty Images

  • Ticker symbol: KLAC
  • Share price: $105.30
  • Bull market return: 970%
  • Dividend yield: 2.3%
  • Headquarters: Milpitas, Calif.

The KLA-Tencor we know today came into being in 1997 from the merger of KLA Instruments and Tencor Instruments. But its experience in the semiconductor industry stretches back to the 1970s, when its predecessor companies got their respective starts. Experience has paid off. KLA-Tencor shares have delivered impressive price appreciation over the last eight-plus years of the bull market, but what really sets this Silicon Valley stock apart is an unusually generous dividend. The technology sector as a whole pays an average dividend of just 1.4%, according to Dividend.com. Suppliers of equipment to the semiconductor industry, which is what KLA-Tencor does, are even more stingy. The company's competition coughs up an average dividend yield of less than 1%. In August, KLA-Tencor hiked its quarterly dividend to 59 cents a share from 54 cents, a 9.3% increase.

 

7 of 7

Nvidia

LAS VEGAS, NV - JANUARY 05:An illuminated sign at the Nvidia booth is seen at CES 2017 at the Las Vegas Convention Center on January 5, 2017 in Las Vegas, Nevada. CES, the world's largest ann

Getty Images

  • Ticker symbol: NVDA
  • Share price: $194.59
  • Bull market return: 2,426%
  • Dividend yield: 0.3%
  • Headquarters: Santa Clara, Calif.

Much like the Backstreet Boys and NSYNC, Nvidia was a unique product of the 1990s. Founded in 1993 and public since 1999, the company blossomed as computers and gaming consoles became more popular and more complex. In its early days Nvidia was primarily known in the gaming community for making high-end video graphics cards. It turns out that graphical processing units (GPUs) have a wide range of applications in today's data-rich world. From the automotive industry to mining for Bitcoins, Nvidia has customers across the business and consumer landscapes. The next big area of growth is expected to be artificial intelligence, which industry observers call the "killer app" for its chips. Analysts expect the company's sales to increase 30% this year, according to Thomson Reuters, while earnings per share should gain 40%. Bull market or not, it's reasonable to question whether shares in Nvidia can keep up such a torrid pace. After all, they've returned well over 2,000% in the past eight and a half years. But for now, at least, Nvidia is holding up its end of the bargain thanks to the impressive top- and bottom-line growth.

 

  • 7 Greatest Tech Stocks of All Time
  • tech stocks
  • Intel (INTC)
  • investing
  • bonds
  • dividend stocks
  • Investing for Income
Share via EmailShare on FacebookShare on TwitterShare on LinkedIn

Recommended

Bonds: 10 Things You Need to Know
Investing for Income

Bonds: 10 Things You Need to Know

Bonds can be more complex than stocks, but it's not hard to become a knowledgeable fixed-income investor.
July 22, 2020
13 Dividend Stocks That Have Paid Investors for 100+ Years
stocks

13 Dividend Stocks That Have Paid Investors for 100+ Years

Here are 13 dividend stocks that each boast a rich history of uninterrupted payouts to shareholders that stretch back at least a century.
May 21, 2020
Kiplinger's Weekly Earnings Calendar
stocks

Kiplinger's Weekly Earnings Calendar

Check out our earnings calendar for the upcoming week, as well as our previews of the more noteworthy reports.
March 7, 2021
Hot Upcoming IPOs to Watch For in 2021
Kiplinger's Investing Outlook

Hot Upcoming IPOs to Watch For in 2021

The most exciting initial public offerings (IPOs) expected in 2021 range from a crypto exchange to an Amazon-backed EV play to a popular grocery-deliv…
March 3, 2021

Most Popular

Senate Passes $3,000 Child Tax Credit for 2021
Coronavirus and Your Money

Senate Passes $3,000 Child Tax Credit for 2021

The provision would temporarily increase the child tax credit to $3,000 or $3,600 per child for most families and have 50% of it paid in advance by th…
March 6, 2021
Senate Passes Bill with More "Targeted" Stimulus Payments
Coronavirus and Your Money

Senate Passes Bill with More "Targeted" Stimulus Payments

The Senate finally passes the $1.9 trillion COVID-relief bill. But fewer people will get a third stimulus check under the Senate version than under th…
March 6, 2021
Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
  • Customer Service
  • About Us
  • Advertise With Us (PDF)
  • Privacy Policy
  • Cookie Policy
  • Kiplinger Careers
  • Accessibility
  • Privacy Preferences

Subscribe to Kiplinger's Personal Finance

Be a smarter, better informed investor.
Save up to 76%Subscribe to Kiplinger's Personal Finance
Dennis Publishing Ltd logoLink to Dennis Publishing Ltd website
Do Not Sell My Information

The Kiplinger Washington Editors, Inc., is part of the Dennis Publishing Ltd. Group.
All Contents © 2021, The Kiplinger Washington Editors

Follow us on InstagramFollow us on FacebookFollow us on TwitterConnect on LinkedInConnect on YouTube