As Q3 earnings season comes to a close, it’s time to take stock of this quarter's best and worst performers amongst the processors and graphics chips stocks, including 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 solid Q3; on average, revenues beat analyst consensus estimates by 3.4% while next quarter's revenue guidance was in line with consensus. Valuation multiples for growth stocks have reverted to their historical means after reaching highs in early 2021, but processors and graphics chips stocks held their ground better than others, with the share prices up 31% on average since the previous earnings results.
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 $275.5 million, up 15.9% year on year, in line with analyst expectations. It was a decent quarter for the company, with an impressive beat of analysts' EPS estimates but underwhelming revenue guidance for the next quarter.
“We delivered second quarter net sales of $276 million dollars, up 16% year-over-year, driven by continued strength in Automotive, which grew 31% year-over-year. We also achieved record non-GAAP Diluted Earnings per Share of $0.40, an increase of 29% year-over-year,” said Vineet Nargolwala, President and CEO of Allegro MicroSystems.
The stock is up 9.3% since the results and currently trades at $28.15.
Is now the time to buy Allegro MicroSystems? Access our full analysis of the earnings results here, it's free.
Best Q3: 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 $18.12 billion, up 206% year on year, outperforming analyst expectations by 12.5%. It was a stunning quarter for the company, with a significant improvement in its gross margin and an impressive beat of analysts' EPS estimates.
Nvidia pulled off the biggest analyst estimates beat and fastest revenue growth among its peers. The stock is up 14.9% since the results and currently trades at $574.4.
Is now the time to buy Nvidia? Access our full analysis of the earnings results here, it's free.
Slowest Q3: 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 $274.2 million, down 30% year on year, falling short of analyst expectations by 0.3%. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter and a miss of analysts' revenue estimates.
SMART had the weakest performance against analyst estimates and slowest revenue growth in the group. The stock is up 23.9% since the results and currently trades at $22.89.
Read our full analysis of SMART's results here.
Broadcom (NASDAQ:AVGO)
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 $9.30 billion, up 4.1% year on year, in line with analyst expectations. It was a slower quarter for the company, with full-year revenue guidance missing analysts' expectations and a decline in its gross margin.
The stock is up 25.1% since the results and currently trades at $1,151.62.
Read our full, actionable report on Broadcom here, it's free.
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 $8.63 billion, down 24.3% year on year, surpassing analyst expectations by 1.3%. It was a decent quarter for the company, with an impressive beat of analysts' EPS estimates but a decline in its operating margin.
The stock is up 38.4% since the results and currently trades at $153.36.
Read our full, actionable report on Qualcomm here, it's free.
Join Paid Stock Investor Research
Help us make StockStory more helpful to investors like yourself. Join our paid user research session and receive a $50 Amazon gift card for your opinions. Sign up here.
The author has no position in any of the stocks mentioned