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 7 processors and graphics chips stocks we track reported a weak Q3; on average, revenues beat analyst consensus estimates by 1.33%, while on average next quarter revenue guidance was 8.57% under consensus. Technology stocks have been hit hard on fears of higher interest rates as investors search for near-term cash flows, but processors and graphics chips stocks held their ground better than others, with the share prices up 23.8% since the previous earnings results, on average.
Best Q3: 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 $237.6 million, up 22.7% year on year, beating analyst expectations by 5.61%. It was a very strong quarter for the company, with a beat on the bottom line and very optimistic guidance for the next quarter.
“Allegro achieved another record quarter, reflecting our team’s strong execution and continued robust demand for our magnetic sensor and power IC products despite cross-currents in the broader macroeconomic environment,” said Vineet Nargolwala, President and CEO of Allegro MicroSystems.
Allegro MicroSystems achieved the strongest analyst estimates beat of the whole group. The stock is up 48.6% since the results and currently trades at $33.69.
Is now the time to buy Allegro MicroSystems? Access our full analysis of the earnings results here, it's free.
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 $8.93 billion, up 20.5% year on year, in line with analyst expectations. It was a decent quarter for the company, with a significant improvement in inventory levels.
The stock is up 9.18% since the results and currently trades at $580.31.
Is now the time to buy Broadcom? Access our full analysis of the earnings results here, it's free.
Weakest 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 $5.93 billion, down 16.5% year on year, beating analyst expectations by 1.91%. It was a weak quarter for the company, with slow revenue growth and underwhelming revenue guidance for the next quarter.
The stock is up 13% since the results and currently trades at $180.15.
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 $5.56 billion, up 29% year on year, missing analyst expectations by 1.48%. It was a weak quarter for the company, with a full year guidance missing analysts' expectations.
AMD pulled off the fastest revenue growth and highest full year guidance raise, but had the weakest performance against analyst estimates among the peers. The stock is up 28.6% since the results and currently trades at $76.73.
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 $11.3 billion, up 22% year on year, in line with analyst expectations. It was a weaker quarter for the company, with underwhelming revenue guidance for the next quarter and an increase in inventory levels.
The stock is up 16.3% since the results and currently trades at $131.00.
The author has no position in any of the stocks mentioned