Wrapping up Q2 earnings, we look at the numbers and key takeaways for the semiconductor manufacturing stocks, including Lam Research (NASDAQ:LRCX) and its peers.
The semiconductor industry is driven by demand for advanced electronic products like smartphones, PCs, servers, and data storage. The need for technologies like artificial intelligence, 5G networks, and smart cars is also creating the next wave of growth for the industry. Keeping up with this dynamism requires new tools that can design, fabricate, and test chips at ever smaller sizes and more complex architectures, creating a dire need for semiconductor capital manufacturing equipment.
The 14 semiconductor manufacturing stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 1.8% while next quarter’s revenue guidance was 2.7% below.
Inflation progressed towards the Fed's 2% goal recently, leading the Fed to reduce its policy rate by 50bps (half a percent or 0.5%) in September 2024. This is the first cut in four years. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be debating 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.
In light of this news, semiconductor manufacturing stocks have held steady with share prices up 2.1% on average since the latest earnings results.
Lam Research (NASDAQ:LRCX)
Founded in 1980 by David Lam, the man who pioneered semiconductor etching technology, Lam Research (NASDAQ:LRCX) is one of the leading providers of wafer fabrication equipment used to make semiconductors.
Lam Research reported revenues of $3.87 billion, up 20.7% year on year. This print exceeded analysts’ expectations by 1%. Overall, it was a strong quarter for the company with an impressive beat of analysts’ EPS estimates and a meaningful improvement in its operating margin.
"Lam's June quarter results came in above the midpoint of our guidance, driven by continued solid execution and growth in our customer support business group," said Tim Archer, Lam Research's President and Chief Executive Officer.
Lam Research Total Revenue
Unsurprisingly, the stock is down 7.1% since reporting and currently trades at $85.76.
Headquartered in Israel, Nova (NASDAQ:NVMI) is a provider of quality control systems used in semiconductor manufacturing.
Nova reported revenues of $156.9 million, up 27.8% year on year, outperforming analysts’ expectations by 5.9%. The business had an exceptional quarter with an impressive beat of analysts’ EPS estimates and a significant improvement in its operating margin.
Nova Total Revenue
Nova delivered the fastest revenue growth among its peers. The market seems happy with the results as the stock is up 22.2% since reporting. It currently trades at $221.56.
Sporting a global footprint of facilities, Photronics (NASDAQ:PLAB) is a manufacturer of photomasks, templates used to transfer patterns onto semiconductor wafers.
Photronics reported revenues of $211 million, down 5.9% year on year, falling short of analysts’ expectations by 6.2%. It was a softer quarter as it posted underwhelming revenue guidance for the next quarter and a miss of analysts’ EPS estimates.
Photronics delivered the weakest performance against analyst estimates in the group. The stock is flat since the results and currently trades at $23.81.
A public company since the late 1960s, Semtech (NASDAQ:SMTC) is a provider of analog and mixed-signal semiconductors used for Internet of Things systems and cloud connectivity.
Semtech reported revenues of $215.4 million, down 9.7% year on year. This result surpassed analysts’ expectations by 1.5%. It was a strong quarter as it also recorded an impressive beat of analysts’ EPS estimates and a significant improvement in its gross margin.
The stock is up 19.6% since reporting and currently trades at $45.65.
Moving away from a low margin storage device management chips in one of the biggest semiconductor business model pivots of the past decade, Marvell Technology (NASDAQ: MRVL) is a fabless designer of special purpose data processing and networking chips used by data centers, communications carriers, enterprises, and autos.
Marvell Technology reported revenues of $1.27 billion, down 5.1% year on year. This number beat analysts’ expectations by 1.5%. Overall, it was a very strong quarter as it also put up a significant improvement in its gross margin and inventory levels.
The stock is up 11.5% since reporting and currently trades at $77.87.
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