Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at Qualcomm (NASDAQ:QCOM) and the best and worst performers in the processors and graphics chips industry.
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.
The Fed cut its policy rate by 50bps (half a percent) in September 2024, the first in roughly four years. This marks the end of its most pointed inflation-busting campaign since the 1980s. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be assessing whether this rate cut's timing (and more potential ones in 2024 and 2025) is ideal for supporting the economy or a bit too late for a macro that has already cooled too much.
While some processors and graphics chips stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 1.3% since the latest earnings results.
Qualcomm (NASDAQ:QCOM)
Having been at the forefront of developing the standards for cellular connectivity for over four decades, Qualcomm (NASDAQ:QCOM) is a leading innovator and a fabless manufacturer of wireless technology chips used in smartphones, autos and internet of things appliances.
Qualcomm reported revenues of $9.39 billion, up 11.1% year on year. This print exceeded analysts’ expectations by 1.9%. Overall, it was a strong quarter for the company with a decent beat of analysts’ EPS estimates and strong sales guidance for the next quarter.
Qualcomm Total Revenue
Unsurprisingly, the stock is down 4.8% since reporting and currently trades at $172.03.
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 an impressive beat of analysts’ EPS estimates.
Nvidia Total Revenue
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 2.5% since reporting. It currently trades at $122.50.
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. The stock is flat since the results and currently trades at $54.39.
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 beat analysts’ expectations by 4.1%. Overall, it was a strong quarter as it also produced an impressive beat of analysts’ EPS estimates and a significant improvement in its operating margin.
The stock is down 11.7% since reporting and currently trades at $105.49.
Originally the semiconductor division of Hewlett Packard, Broadcom (NASDAQ:AVGO) is a semiconductor conglomerate that spans wireless, networking, data storage, and industrial end markets along with an infrastructure software business focused on mainframes and cybersecurity.
Broadcom reported revenues of $13.07 billion, up 47.3% year on year. This result met analysts’ expectations. Zooming out, it was a strong quarter as it also recorded a decent beat of analysts’ EPS estimates but underwhelming revenue guidance for the next quarter.
The stock is up 15.5% since reporting and currently trades at $176.69.
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