As we reflect back on the just completed Q2 processors and graphics chips sector earnings season, we dig into the relative performance of Allegro MicroSystems (NASDAQ:ALGM) and its peers.
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; on average, revenues beat analyst consensus estimates by 4%, while on average next quarter revenue guidance was 3.35% above consensus. Increasing interest rates hurt growth companies as investors search for near-term cash flows and while some of the processors and graphics chips stocks have fared somewhat better that others, they have not been spared, with share prices declining 7.9% since the previous earnings results, on average.
Allegro MicroSystems (NASDAQ:ALGM)
The result of a spinoff from Sanken in Japan, Allegro MicroSystems (NASDAQ:ALGM) is a designer of power management chips and distance sensors used in electric vehicles and data centers.
Allegro MicroSystems reported revenues of $278.3 million, up 27.8% year on year, beating analyst expectations by 1.84%. It was a strong quarter for the company, with a significant improvement in its operating margin and an impressive beat of analysts' EPS estimates. Revenue guidance for the next quarter also came in ahead of consensus estimates.
“We delivered a strong start to fiscal year 2024, including record sales of $278 million, up 28% year-over-year, achieving $1 billion in sales on a trailing twelve-month basis, marking a new milestone. We also achieved record non-GAAP Diluted Earnings per Share of $0.39, an increase of 63% year-over-year,” said Vineet Nargolwala, President and CEO of Allegro MicroSystems.
The stock is down 34.5% since the results and currently trades at $33.81.Is now the time to buy Allegro MicroSystems? Read our full report on Allegro MicroSystems here.
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 $13.5 billion, up 101% year on year, beating analyst expectations by 21.9%. It was an incredible quarter for the company, with beats across nearly every key metric. Nvidia's revenue guidance for the next quarter also blew past analysts' expectations.
Nvidia delivered the strongest analyst estimates beat and fastest revenue growth among its peers. The stock is down 3.55% since the results and currently trades at $454.49.
Is now the time to buy Nvidia? Access our full analysis of the earnings results here, it's free.
Weakest Q2: AMD (NASDAQ:AMD)
Founded in 1969 by a group of former Fairchild semiconductor executives led by Jerry Sanders, Advanced Micro Devices or AMD (NASDAQ:AMD) is one of the leading designers of computer processors and graphics chips used in PCs and data centers.
AMD reported revenues of $5.36 billion, down 18.2% year on year, in line with analyst expectations. It was a weak quarter for the company, with a decline in its operating margin and underwhelming revenue guidance for the next quarter.
The stock is down 9.69% since the results and currently trades at $106.26.
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 $8.88 billion, down 0.6% year on year, in line with analyst expectations. It was a weaker quarter for the company, with an increase in its inventory levels and underwhelming revenue guidance for the next quarter.
The stock is down 5.87% since the results and currently trades at $868.66.
Based in the US, SMART Global Holdings (NASDAQ:SGH) is a diversified semiconductor company offering memory, digital, and LED products.
SMART reported revenues of $383.3 million, down 17.1% year on year, beating analyst expectations by 2.2%. It was a mixed quarter for the company, with a significant improvement in its inventory levels but a decline in its operating margin. Additionally, on the negative front, revenue guidance for the next quarter missed analysts' expectations. However, EPS guidance beat.
The stock is down 8.72% since the results and currently trades at $24.28.
The author has no position in any of the stocks mentioned