Quarterly earnings results are a good time to check in on a company’s progress, especially compared to other peers in the same sector. Today we are looking at Broadcom (NASDAQ:AVGO), and the best and worst performers in the processors and graphics chips group.
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. Tech stocks have been hit the hardest as investors start to value profits over growth and while some of the processors and graphics chips stocks have fared somewhat better than others, they have not been spared, with share prices declining 9.92% since the previous earnings results, on average.
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 mixed quarter for the company, with revenue and EPS outperforming Wall Street's estimates. On the other hand, its inventory levels materially increased, and its revenue guidance for the next quarter came in slightly below Wall Street's estimates.
"Broadcom's third quarter results were driven by demand for next generation networking technologies as hyperscale customers scale out and network their AI clusters within data centers," said Hock Tan, President and CEO of
The stock is down 7.83% since the results and currently trades at $850.6.Is now the time to buy Broadcom? Read our full report on Broadcom 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 pulled off the strongest analyst estimates beat and fastest revenue growth among its peers. The stock is down 6.67% since the results and currently trades at $439.8.
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 underwhelming revenue guidance for the next quarter and a decline in its operating margin.
The stock is down 13% since the results and currently trades at $102.34.
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 decent quarter for the company, with a significant improvement in its operating margin. On the other hand, its inventory levels materially increased.
The stock is down 35.2% since the results and currently trades at $33.43.
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 $651.2 million, down 37.1% year on year, beating analyst expectations by 1.79%. It was a mixed quarter for the company, with an impressive beat of analysts' EPS estimates but a decline in its operating margin and increasing inventory levels.
Qorvo had the slowest revenue growth among the peers. The stock is down 8.03% since the results and currently trades at $97.51.
The author has no position in any of the stocks mentioned