The end of an earnings season can be a great time to assess how companies are handling the current business environment and discover new stocks. Let’s have a look at how KLA Corporation (NASDAQ:KLAC) and the rest of the semiconductor manufacturing stocks fared in Q2.
The semiconductor industry is driven by demand for advanced electronic products like smartphones, PCs, servers and data storage. The growth of data and technologies like artificial intelligence, 5G networks and smart cars are also creating a next wave of growth for the industry. To keep up with ever changing customer needs requires new tools that can design, fabricate and test at ever smaller sizes and more complex architectures, and that is driving the demand for semiconductor capital manufacturing equipment.
The 14 semiconductor manufacturing stocks we track reported a slower Q2; on average, revenues were in line with analyst consensus estimates, while on average next quarter revenue guidance was 1.39% under consensus. Tech stocks have been hit the hardest as investors start to value profits over growth and while some of the semiconductor manufacturing stocks have fared somewhat better than others, they have not been spared, with share prices declining 9.03% since the previous earnings results, on average.
KLA Corporation (NASDAQ:KLAC)
Formed by the 1997 merger of the two leading semiconductor yield management companies, KLA Corporation (NASDAQ:KLAC) is the leading supplier of equipment used to measure and inspect semiconductor chips.
KLA Corporation reported revenues of $2.36 billion, down 5.29% year on year, beating analyst expectations by 4.19%. It was a very strong quarter for the company, with an impressive beat of analysts' EPS estimates and optimistic revenue guidance for the next quarter.
"KLA's June quarter results exceeded expectations, demonstrating the combination of the broad strength of our portfolio, focused operational execution and high-performing teams coming together to deliver against our financial objectives in what remains a challenging demand environment," said Rick Wallace, president and CEO, KLA Corporation.
The stock is down 4.09% since the results and currently trades at $462.87.Is now the time to buy KLA Corporation? Read our full report on KLA Corporation here.
Best Q2: Applied Materials (NASDAQ:AMAT)
Founded in 1967 as the first company that built the tools for other companies to use to make semiconductors, Applied Materials (NASDAQ:AMAT) is the largest provider of semiconductor wafer fabrication equipment.
Applied Materials reported revenues of $6.43 billion, down 1.46% year on year, beating analyst expectations by 4.29%. It was a very strong quarter for the company, with an impressive beat of analysts' revenue and EPS estimates and optimistic revenue guidance for the next quarter.
Applied Materials scored the strongest analyst estimates beat among its peers. The stock is up 1.64% since the results and currently trades at $139.65.
Is now the time to buy Applied Materials? Access our full analysis of the earnings results here, it's free.
Weakest Q2: IPG Photonics (NASDAQ:IPGP)
Both a designer and manufacturer of most of its products, IPG Photonics (NASDAQ:IPGP) is a provider of high-performance fiber lasers that are used for cutting, welding and processing raw materials.
IPG Photonics reported revenues of $340 million, down 9.83% year on year, missing analyst expectations by 1.79%. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter and a miss of analysts' revenue estimates.
The stock is down 22.5% since the results and currently trades at $101.89.
Lam Research (NASDAQ:LRCX)
Founded in 1980 by David Lam, who pioneered semiconductor etching technology, Lam Research (NASDAQ:LCRX) is one of the leading providers of the wafer fabrication equipment used to make semiconductors.
Lam Research reported revenues of $3.21 billion, down 30.8% year on year, beating analyst expectations by 1.83%. It was a mixed quarter for the company, with an impressive beat of analysts' revenue and EPS estimates. On the other hand, its inventory levels materially increased, its operating margin declined and revenue declined in absolute terms.
The stock is down 0.94% since the results and currently trades at $636.99.
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 $224.2 million, up 1.94% year on year, missing analyst expectations by 2.52%. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter and a miss of analysts' revenue estimates. The company blamed "a temporary demand slowdown in some of our end markets" and said that "softer mainstream demand more than offset high-end growth in Asia".
The stock is down 13% since the results and currently trades at $20.45.
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The author has no position in any of the stocks mentioned