Cowen’s Ramsay picks these semiconductor stocks over Nvidia

A week after Goldman Sachs’ Katie Koch predicted an upcoming super cycle in semiconductor demand, Cowen’s Matt Ramsay picked five stocks within this space that he sees as well-positioned for 2022.

Ramsay’s picks include ON Semiconductor Corp, NXP Semiconductors NV, STMicroelectronics NV, Infineon Technologies AG, and Wolfspeed Inc.

Highlights from Ramsay’s interview on CNBC’s ‘Closing Bell’

His bullish call on these stocks is based on their role in the ongoing shift to electric vehicles. On CNBC’s “Closing Bell”, he said:

Electric vehicles are about 8.0% of cars globally today, and we model that out to about 35% in 2030 and about 50% in the western world. So, it’s a pretty remarkable trend that’s coming, and we’re just at the beginning of it.

According to Ramsay, ESG initiatives and regulatory push for electric vehicles will benefit these stocks in the near term. He’s also convinced that EVs are the priority recipient of semiconductors, which is to say that the subsector is comparatively less affected in a supply constraint environment.

Why not the bigger players like Nvidia and AMD?

Ramsay’s picks are interesting considering almost all of these stocks have already had a fantastic run this year, with ON Semiconductor at the top end, up more than 100% year-to-date.

We’re at the very beginning of a 10- or 20-year cycle in power semis in the automotive space. When you compare them with high flyers like Nvidia, AMD, or Monolithic Power, these valuations are very reasonable relative to the industry trend that’s going to underpin their growth.

He agreed that these “bigger” names were better positioned for autonomous vehicles, but his present call is focused primarily on electrification – a near-term event versus self-driving that is still years apart.