Welcome to the MANGO world of semiconductor stocks
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Just when you were getting used to the FAANG stocks, here comes something new: MANGO.
That's what Bank of America analysts Vivek Arya, Jamie Zakalik and Blake Friedman have come up with in a report on what they called the "state of the union" of the semiconductor market in which they looked at Marvell Technology (NASDAQ:MRVL) [the "M" in MANGO], Broadcom (NASDAQ:AVGO), Advanced Micro Devices (NASDAQ:AMD) and Analog Devices (ADI) [or, the "A" in MANGO], Nvidia (NASDAQ:NVDA) [N], Global Foundries (GFS) [G] and On Semi (ON) [which you might have discerned by now is the "O" to complete the MANGO acronym.]

The BofA team said that investor sentiment has been "significantly impacted" by recent volatility in the chip market, as evidenced by the Philadelphia Semiconductor Index (SOX) being down by about 11% this year, and the S&P 500 (SP500) off by about 5% over the same time period. However, BofA said they remain "comfortable" about the opportunities for chip stocks as "the structural importance of semiconductors to the rapidly digitizing global economy can not be overstated."
Arya, Zakalik and Friedman also showed a sense of humor about their new acronym, calling it a "crude attempt" to create a semiconductor equivalent to FAANG--which stands for Meta's Facebook (FB), Apple (AAPL), Amazon (AMZN), Netflix (NFLX) and Google (GOOG).
The analysts said they have a "high conviction" about the MANGO stocks because of the end markets to which the companies are tied.
Nvidia (NVDA), Marvell (MRVL), Broadcom (AVGO) and AMD (AMD) are "favored" for their connections cloud, artificial intelligence, enterprise and telecommunications capital spending plans. Analog Devices (ADI) got high marks for what BofA's team called its "leading profitability" of 71% gross margins among semiconductors.
Arya, Zakalik and Friedman said On Semi (ON) remains "compelling" despite its large presence in the markets for electric cars and vehicular driver-assistance systems. The analyst said that recent Covid-related shutdowns in parts of Asia, and Russia's invasion of Ukraine have added to supply constraints and production issues impacting the auto industry. Still, the BofA analysts said demand remains strong for auto-related semiconductors and should remain so for the foreseeable future.
With regards to the MANGO companies' ratings, Arya, Zakalik and Friedman have buy ratings on Marvell (MRVL), AMD (AMD), Analog Devices (ADI) Broadcom (AVGO), Nvidia (NVDA), GlobalFoundries (GFS) and On Semi (ON).
Earlier this week, chip stocks got a boost as Nvidia (NVDA) Chief Executive Jensen Huang said his company would consider using Intel's (INTC) foundry for some of its chipmaking processes.