Semiconductor Stocks in Focus as Earnings Season Approaches

3 Top-Rated Semiconductor Stocks to Watch as Earnings Season Kicks Off

Semiconductors are the backbone of our tech-driven world, powering everything from smartphones and computers to data centers, automotive systems, and consumer electronics. However, recent headlines about the Biden administration's potential export restrictions on critical chipmaking equipment to China have created a ripple of uncertainty for major players in the industry. Plus, former President Trump's comments suggesting that Taiwan should pay for U.S. defense further fueled negative market sentiment toward chip stocks, given Taiwan Semiconductor's (TSM) critical industry role. Despite the recent geopolitical turbulence, Cantor Fitzgerald and Deutsche Bank analysts remain bullish on the industry's prospects, thanks to the ongoing artificial intelligence (AI) boom and recovery in memory markets, which are creating a favorable environment for select semiconductor companies. With both Cantor Fitzgerald and Deutsche Bank highlighting reasons to be optimistic about AI-driven semiconductor stocks as earnings season ramps up, here's a closer look at three standout chip picks that made the cut among both broker's top recommendations. Semiconductor Stock #1: Broadcom Commanding a massive market cap of about $749.7 billion, California-based global tech giant Broadcom Inc. (AVGO) is renowned for its innovative semiconductor, enterprise software, and security solutions. Serving crucial markets like cloud, data center, networking, broadband, wireless, storage, and industrial sectors, Broadcom's cutting-edge products power everything from mobile and broadband connectivity to mainframe and cybersecurity. Shares of this chip giant have rallied about 82% over the past 52 weeks, easily dwarfing the broader S&P 500 Index's ($SPX) gains of 22.7% during the same time frame. Additionally, in 2024, the stock is up 46.3%, outperforming the SPX's 16.7% return on a YTD basis. With a respectable 13-year streak of consecutive dividend increases, Broadcom exemplifies its unwavering commitment to shareholder value. The company's annualized dividend of $2.10 translates to an attractive 1.26% dividend yield. Plus, the company maintains a healthy payout ratio of 53.46%. On June 12, Broadcom announced a 10-for-1 stock split alongside its better-than-expected Q2 earnings results, which triggered a 12.3% surge in its shares in the subsequent trading session. The company's historic first-ever stock split took effect after the close of trading on July 12, and as of July 15, AVGO shares are now trading at split-adjusted prices. The chipmaker also demonstrated a strong financial performance in Q2, with revenue soaring an impressive 43% year over year to $12.5 billion, and sailing past projections by 4%. Adjusted EPS of $10.96 climbed 6.2% annually, and narrowly edged past estimates. Discussing the Q2 performance, CEO Hock Tan said, "Broadcom's second quarter results were once again driven by AI demand and VMware. Revenue from our AI products was a record $3.1 billion during the quarter. Infrastructure software revenue accelerated as more enterprises adopted the VMware software stack to build their own private clouds." Encouraged by the strong Q2 performance, management raised its fiscal 2024 revenue and adjusted EBITDA guidance. Revenue for the entire year is now expected to hit approximately $51 billion, while adjusted EBITDA is expected to be approximately 61% of the projected revenue. Analysts tracking Broadcom project the company's profit to climb 31.3% year over year to $4.91 per share in fiscal 2025, following a projected 3% drop in EPS this fiscal year. AVGO stock has a consensus "Strong Buy" rating overall. Of the 32 analysts in coverage, 29 suggest a "Strong Buy," and the remaining three give a "Hold" rating. The average analyst price target of $190.51 indicates a potential upside of 15.8% from the current price levels. The Street-high price target of $240 suggests that the stock could rally as much as 45.8%. Semiconductor Stock #2: NXP Semiconductors Netherlands-based NXP Semiconductors N.V. (NXPI) is the trusted partner for cutting-edge solutions in automotive, industrial IoT, mobile, and communications infrastructure markets. With a market cap of around $72.5 billion, NXP blends advanced technology with innovative talent to create systems that enhance the connected world, making it safer and more secure. With operations in over 30 countries, the company has emerged as a global leader driving the future of connectivity. Shares of NXP Semiconductors have surged 21.5% over the past 52 weeks and 12.8% on a YTD basis. The stock is down sharply today after its most recent earnings report, and is now off more than 10% from its July 17 high - which means investors may want to watch for NXPI to stabilize over the coming sessions for a potential "buy the dip" opportunity. The company announced its Q2 earnings results after Monday's closing bell. Despite dropping 5% year over year, the company's revenue of $3.1 billion still managed to slightly exceed Wall Street's expectations. Additionally, on an adjusted basis, the company earned $3.20 per share, in line with estimates. During the quarter, the chip company generated $761 million in cash flow from operations, with net capex investments of $184 million, resulting in a solid non-GAAP free cash flow of $577 million. Commenting on the Q2 performance, CEO Kurt Sievers said, "With our second-quarter results and guidance for the third quarter NXP has successfully navigated the cyclical trough in our businesses and we expect to resume sequential growth." Specifically, management expects Q3 revenue to range between $3.15 billion and $3.35 billion, while gross profit is projected to land between $1.79 billion and $1.94 billion. Adjusted EPS is anticipated to range between $3.21 and $3.63. Analysts tracking NXP Semiconductors project the company's profit to improve by 14.3% year over year to $14.25 per share in fiscal 2025, preceded by a 1.8% dip in EPS this fiscal year. On July 10, NXP paid its shareholders an interim dividend of $1.014 per share. This brings its annualized dividend to $4.06, offering a solid 1.43% yield. With a conservative payout ratio of 31.88%, NXP strikes a balance between investing in future growth and returning value to its investors. NXPI stock has a consensus "Moderate Buy" rating overall. Among 25 analysts, 14 suggest a "Strong Buy," two recommend "Moderate Buy," eight advise "Hold," and the remaining one has a "Strong Sell" rating. The average analyst price target of $294 indicates a potential upside of 13% from the current price levels. The Street-high price target of $370 suggests that the stock could rally as much as 42.4%. Semiconductor Stock #3: Marvell Technology Delaware-based Marvell Technology, Inc. (MRVL) is a global leader in advanced semiconductor solutions that power the backbone of data infrastructure. Trusted by top technology companies for over 25 years, Marvell excels in moving, storing, processing, and securing global data with tailor-made semiconductor solutions. From the core of data centers to the network edge, Marvell's cutting-edge System-on-a-Chip designs integrate analog, mixed-signal, and digital processing capabilities. Valued at $59.7 billion by market cap, Marvell's shares have climbed 8.4% over the past 52 weeks, and roughly 14% on a YTD basis. On June 21, Marvell announced a quarterly dividend of $0.06 per share, set to be distributed to its shareholders on July 31. The company's annualized dividend of $0.24 translates to a 0.35% dividend yield. With a conservative payout ratio of 30.72%, the company has room for further dividend increases. Marvell reported its fiscal 2025 Q1 earnings results on May 30. While the company's net revenue of $1.2 billion missed Wall Street's forecasts by about $1 million, its adjusted EPS of $0.24 was in line with estimates. Despite falling short of analysts' expectations, the company's net revenue came in above the midpoint of management's guidance, thanks to stronger-than-expected AI demand. During the quarter, Marvell's data center revenue soared an impressive 87% year over year, fueled by new AI programs and a solid electro-optics foundation. Plus, the company's cash flow from operations stood at $324.5 million, highlighting its strong operational efficiency. "We see a favorable setup for the second half of this fiscal year, driven by continued growth in data center and the beginning of a recovery in enterprise networking and carrier infrastructure," said CEO Matt Murphy. For fiscal Q2, management expects net revenue of approximately $1.250 billion, with a potential variance of plus or minus 5%. GAAP and non-GAAP gross margins are expected to be approximately 46.2% and 62%, respectively. Adjusted EPS is projected to come in at $0.29. Full-year GAAP EPS is projected to decline 6.25% to $0.75, on average. Looking forward to fiscal 2026, analysts tracking Marvell project the company's profit to hit $1.72 per share, up 129.3% annually. MRVL stock has a consensus "Strong Buy" rating overall. Of the 29 analysts covering Marvell, 26 suggest a "Strong Buy," two recommend "Moderate Buy," and the remaining one backs a "Hold" rating. The average analyst price target of $89.11 indicates a potential upside of 29.4% from the current price levels. The Street-high price target of $100 suggests that the stock could rally as much as 45.2%. On the date of publication, Anushka Mukherji did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The Zacks Analyst Blog Highlights Advanced Micro Devices, NVIDIA, Micron Technology and Marvell Technology

Chicago, IL - July 22, 2024 - Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Advanced Micro Devices AMD, NVIDIA NVDA, Micron Technology MU, Marvell Technology MRVL. Here are highlights from Friday's Analyst Blog: Do More U.S. Restrictions on China Make AMD a Risky Bet? Advanced Micro Devices shares have declined more than 14% in the past week. The chipmaker's shares suffered heavy losses following aBloomberg news report that the U.S. government is reportedly planning to tighten restrictions on chip exports to China. The United States already prohibits the sale of high-end chips above a certain capability threshold in China. AMD shares declined 10.2% on Jul 17 on the heels of the Bloomberg report. It further declined by 2.3% to close at $155.77 on Jul 18. Year to date, AMD shares have gained 5.7%, underperforming the broader Zacks Computer & Technology sector's return of 20.8%. The Biden administration's tightening plan sent shockwaves throughout the semiconductor industry. Apart from AMD, shares of NVIDIA, Micron Technology, Marvell Technology and ASML dropped 7.09%, 6.3%, 10.1% and 12.7%, respectively, on Jul 17. On Jul 18, while both NVIDIA and Marvell shares recovered slightly, both MU and ASML continued their drop along with AMD. Among these semiconductor bellwethers, Marvell has the most exposure to China, 45% of total revenues, followed by ASML, NVIDIA and AMD, generating roughly 41%, 20% and 15% of revenues, respectively. Micron generates close to 10% of revenues from China. (Read More: Chip Stocks Tumble as US Plans to Tighten China Restrictions). AMD Stock Suffers From Stiff Competition AMD is suffering from stiff competition from NVIDIA. Both stocks have been the darlings of investors, driven by the massive proliferation of AI that has created a strong demand for GPU chips required to power AI models. However, the challenging macroeconomic environment and rising uncertainties over the upcoming Presidential elections don't bode well for AMD stock, given its smaller size and GPU market share. These factors have also made investors skeptical of its ability to dethrone NVIDIA. NVIDIA's strategy to release new AI chip models annually instead of its previous two-year update timeline intensifies competition for AMD. AMD's near-term prospects further suffer from weakness in the Embedded and Gaming segments. For second-quarter 2024, the Embedded and the Gaming segment revenues are expected to decline by a significant double-digit percentage year over year. Sequentially, Embedded segment revenues are expected to be flat, while the Gaming segment revenues are expected to decline by a significant double-digit percentage. The Zacks Consensus Estimate for second-quarter Embedded revenues is currently pegged at $845.89 million, indicating a 45.7% year-over-year decline. The consensus mark for Gaming is pegged at $657.24 million, suggesting a massive 165.4% decline. Estimate Revisions Witnessing Upward Movement AMD expects second-quarter 2024 revenues to be $5.7 billion (+/-$300 million). At the mid-point of the revenue range, this represents year-over-year growth of approximately 6% and sequential growth of approximately 4%. The Zacks Consensus Estimate for second-quarter 2024 revenues is pegged at $5.71 billion, indicating 6.54% growth year over year. The consensus mark for earnings is pegged at 67 cents per share, up a penny over the past 30 days. AMD's Robust Portfolio Aids Long-Term Prospects AMD's long-term prospects are bright, given robust spending on AI chips. Gartner expects revenues from AI semiconductors to hit $71.25 billion in 2024, up 33% over 2023. For 2025, revenues are expected to reach $91.96 billion, up roughly 29% over the 2024 estimate. More importantly, in 2024, AI chips revenue from compute electronics is projected to total $33.4 billion, which will account for 47% of total AI semiconductors revenue. This bodes well for AMD as its portfolio expansion initiatives are making it well-positioned in the data center market as well as in the growing AI-enabled consumer PC market over the long haul. New offerings like the Instinct MI325X accelerator are helping to expand AMD's footprint in the data center market. AMD has launched the Ryzen AI 300 Series, the third generation of AMD AI-enabled mobile processors, and Ryzen 9000 Series processors for laptop and desktop PCs. AMD is also benefiting from its strong partner base. At Computex, Microsoft, HP, Lenovo and Asus unveiled new PCs powered by third-gen AMD Ryzen AI 300 Series processors and AMD Ryzen 9000 Series desktop processors. The recently announced Silo AI acquisition expands AMD's AI ecosystem. The company has been on an acquisition spree to strengthen its AI ecosystem. In the past 12 months, it has spent $125 million on a dozen acquisitions. Nod.ai and Mipsology are some other notable acquisitions in the recent past. AMD stock is trading at a premium to the Zacks Electronics - Semiconductors industry. Its forward 12-month P/E of 35.54X is higher than the industry's 34.56X. Conclusion AMD's near-term prospects are dull, given the weakness in the Embedded and Gaming segments amid stiff competition from NVIDIA. AMD has a Growth Style Score of D, which makes the stock unattractive for growth-oriented investors. AMD currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point in the stock. However, investors who already own the stock may expect the company's growth prospects to be rewarding over the long term. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Today you can access their live picks without cost or obligation. Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release. Free Report - 3 Stocks Sneaking Into Hydrogen Energy Demand for clean hydrogen energy is projected to reach $500 billion by 2030 and grow 5-FOLD by 2050. No guarantees, but three companies are quietly getting the jump on their competition. Zacks Investment Research is temporarily offering an urgent Special Report naming and explaining these emerging powerhouses primed to boom. Click below for Hydrogen Energy: 3 Industrial Giants to Ride the Next Renewable Energy Wave. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Advanced Micro Devices, Inc. (AMD) : Free Stock Analysis Report Micron Technology, Inc. (MU) : Free Stock Analysis Report NVIDIA Corporation (NVDA) : Free Stock Analysis Report Marvell Technology, Inc. (MRVL) : Free Stock Analysis Report The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The Zacks Analyst Blog Highlights Broadcom, Roche, Micron Technology and Moving iMage Technologies

Chicago, IL - July 22, 2024 - Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Broadcom Inc. AVGO, Roche Holding AG RHHBY, Micron Technology, Inc. MU and Moving iMage Technologies, Inc. MITQ. Here are highlights from Friday's Analyst Blog: Top Analyst Reports for Broadcom, Roche Holdings and Micron The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including Broadcom Inc., Roche Holding AG and Micron Technology, Inc., as well a micro-cap stock Moving iMage Technologies, Inc. The Zacks microcap research is unique as our research content on these small and under-the-radar companies is the only research of its type in the country. These research reports have been hand-picked from the roughly 70 reports published by our analyst team today. You can see all of today's research reports here >>> Broadcom shares have outperformed the Zacks Electronics - Semiconductors industry over the year-to-date period (+45.1% vs. -47.5%). The company's fiscal second quarter benefited from strong deployment of AI by hyperscalers, service providers and enterprises. Networking remained strong as the company witnessed strong growth. Sales of the PAM-5 and Jericho 3, which Broadcom deployed successfully in close collaboration with partners like Arista Networks, Dell, Juniper, and Supermicro, doubled year over year. It also doubled shipments of PCI Express switches and NICs in the AI backend fabric. AI sales surged an astounding 280% year over year and is now expected to be more than $11 billion for fiscal 2024. Broadcom expects networking revenues to be strong. Server storage connectivity revenues are expected to recover modestly in the second half of 2024. (You can read the full research report on Broadcom here >>>) Shares of Roche have gained +8.2% over the year-to-date period against the Zacks Large Cap Pharmaceuticals industry's gain of +18.4%. The company's Vabysmo, Ocrevus, Hemlibra and Polivy boost growth. Vabysmo has put up a stellar performance against Eylea. The company's efforts to develop new drugs to combat the decline in legacy drugs are encouraging. However, the approval of a higher dose of Eylea might pose challenges for Vabysmo. Roche's performance has been negatively impacted by lower COVID-19-product-related sales. This, in turn, has significantly affected its top line, even though the diagnostics base business and newer drugs maintain growth. The outlook for 2024 is ordinary as well. Competition from biosimilars for established cancer medicines like Avastin, MabThera/Rituxan and Herceptin also hurt sales. (You can read the full research report on Roche here >>>) Micron Technology shares have gained +37.0% over the year-to-date period against the Zacks Semiconductor Memory industry's gain of +37.7%. The company is benefiting from improved market conditions, robust sales executions and strong growth across multiple business units. The positive impact of inventory improvement in the data center, as well as stabilization in other markets, such as automotive, industrial and others, is contributing to top-line growth. It anticipates the pricing of DRAM and NAND chips to increase next year, thereby improving its revenues. The pricing benefits should primarily be driven by rising AI servers, causing a scarcity in the availability of cutting-edge DRAM and NAND supply. Also, 5G adoption in the Internet of Things devices and wireless infrastructure is likely to spur demand for memory and storage. The stock has outperformed the S&P 500 year to date. However, the United States and China's tit-for-tat trade war is a major threat to the company. (You can read the full research report on Micron Technology here >>>) Shares of Moving iMage Technologies have underperformed the Zacks Technology Services industry over the year-to-date period (-27.0% vs. +19.1%). This microcap company with market capitalization of $7.03 million is witnessing supply chain disruptions, competition from OTT platforms and regulatory compliance costs pose risks. Nevertheless, Moving Image Technologies' new share repurchase program, effective until Jun 30, 2024, signals confidence in financial stability and growth. This follows a previous program where 6.3% of shares were repurchased. MiT's significant contract win with Alamo Drafthouse Cinema and expansion into high-margin SaaS and subscription-based products like MiTranslator and CineQC promise higher margins and recurring revenues. Diversifying into live entertainment and esports markets mitigates cinema industry cyclicality. Operating in a growing market, MiT is well-positioned to capitalize on technological advancements and increased demand for high-quality cinema experiences. Financial stability, as evidenced by $5.9 million in cash, supports growth. (You can read the full research report on Moving iMage Technologies here >>>) Today you can access their live picks without cost or obligation. Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release. Free Report - 3 Stocks Sneaking Into Hydrogen Energy Demand for clean hydrogen energy is projected to reach $500 billion by 2030 and grow 5-FOLD by 2050. No guarantees, but three companies are quietly getting the jump on their competition. Zacks Investment Research is temporarily offering an urgent Special Report naming and explaining these emerging powerhouses primed to boom. Click below for Hydrogen Energy: 3 Industrial Giants to Ride the Next Renewable Energy Wave. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Roche Holding AG (RHHBY) : Free Stock Analysis Report Micron Technology, Inc. (MU) : Free Stock Analysis Report Broadcom Inc. (AVGO) : Free Stock Analysis Report Moving iMage Technologies, Inc. (MITQ): Free Stock Analysis Report The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.