Processors and Graphics Chips Stocks Q2 Highlights: SMART (NASDAQ:SGH)

SGH Cover Image — Processors and Graphics Chips Stocks Q2 Highlights: SMART (NASDAQ:SGH)

Kayode Omotosho

Tue, Oct 1, 2024, 3:02 AM 5 min read

The biggest demand drivers for processors (CPUs) and graphics chips at the moment are secular trends related to 5G and Internet of Things, autonomous driving, and high performance computing in the data center space, specifically around AI and machine learning. Like all semiconductor companies, digital chip makers exhibit a degree of cyclicality, driven by supply and demand imbalances and exposure to PC and Smartphone product cycles.

The 9 processors and graphics chips stocks we track reported a mixed Q2. As a group, revenues beat analysts’ consensus estimates by 0.9% while next quarter’s revenue guidance was 12.9% below.

Big picture, the Federal Reserve has a dual mandate of inflation and employment. The former had been running hot throughout 2021 and 2022 but cooled towards the central bank's 2% target as of late. This prompted the Fed to cut its policy rate by 50bps (half a percent) in September 2024. Given recent employment data that suggests the US economy could be wobbling, the markets will be assessing whether this rate and future cuts (the Fed signaled more to come in 2024 and 2025) are the right moves at the right time or whether they're too little, too late for a macro that has already cooled.

While some processors and graphics chips stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 3% since the latest earnings results.

SMART (NASDAQ:SGH)

Based in the US, SMART Global Holdings (NASDAQ:SGH) is a diversified semiconductor company offering memory, digital, and LED products.

SMART reported revenues of $300.6 million, down 12.7% year on year. This print was in line with analysts’ expectations, but overall, it was a mixed quarter for the company with a significant improvement in its gross margin but underwhelming revenue guidance for the next quarter.

"We are pleased with our Q3 operating results and continued progress in our transformation into a high-performance, high-availability enterprise solutions company," said Mark Adams, CEO of SGH.

Unsurprisingly, the stock is down 9.8% since reporting and currently trades at $20.94.

Is now the time to buy SMART? Access our full analysis of the earnings results here, it’s free.

Best Q2: Nvidia (NASDAQ:NVDA)

Founded in 1993 by Jensen Huang and two former Sun Microsystems engineers, Nvidia (NASDAQ:NVDA) is a leading fabless designer of chips used in gaming, PCs, data centers, automotive, and a variety of end markets.

Nvidia reported revenues of $30.04 billion, up 122% year on year, outperforming analysts’ expectations by 4.5%. The business had an exceptional quarter with a significant improvement in its inventory levels and a significant improvement in its gross margin.

Nvidia scored the biggest analyst estimates beat and fastest revenue growth among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 3.2% since reporting. It currently trades at $121.57.

Is now the time to buy Nvidia? Access our full analysis of the earnings results here, it’s free.

Weakest Q2: Lattice Semiconductor (NASDAQ:LSCC)

A global leader in its category, Lattice Semiconductor (NASDAQ:LSCC) is a semiconductor designer specializing in customer-programmable chips that enhance CPU performance for intensive tasks such as machine learning.

Lattice Semiconductor reported revenues of $124.1 million, down 34.7% year on year, falling short of analysts’ expectations by 4.7%. It was a disappointing quarter as it posted underwhelming revenue guidance for the next quarter and a decline in its operating margin.

Lattice Semiconductor delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 4.5% since the results and currently trades at $52.43.

Read our full analysis of Lattice Semiconductor’s results here.

Intel (NASDAQ:INTC)

Inventor of the x86 processor that powered decades of technological innovation in PCs, data centers, and numerous other markets, Intel (NASDAQ: INTC) is the leading manufacturer of computer processors and graphics chips.

Intel reported revenues of $12.83 billion, flat year on year. This print lagged analysts' expectations by 1.1%. Overall, it was a softer quarter as it also recorded underwhelming revenue guidance for the next quarter and a decline in its operating margin.

The stock is down 19.6% since reporting and currently trades at $23.42.

Read our full, actionable report on Intel here, it’s free.

Qorvo (NASDAQ:QRVO)

Formed by the merger of TriQuint and RF Micro Devices, Qorvo (NASDAQ: QRVO) is a designer and manufacturer of RF chips used in almost all smartphones globally, along with a variety of chips used in networking equipment and infrastructure.

Qorvo reported revenues of $886.7 million, up 36.2% year on year. This result topped analysts’ expectations by 4.1%. It was a strong quarter as it also recorded an impressive beat of analysts’ EPS estimates and a significant improvement in its operating margin.

The stock is down 12.9% since reporting and currently trades at $104.03.

Read our full, actionable report on Qorvo here, it’s free.

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