As Q2 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 Qorvo (NASDAQ:QRVO) 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 6 processors and graphics chips stocks we track reported a weaker Q2; on average, revenues missed analyst consensus estimates by 2%, while on average next quarter revenue guidance was 5.98% under consensus. Tech stocks have been hit the hardest as investors start to value profits over growth and processors and graphics chips stocks have not been spared, with share prices down 26.3% since the previous earnings results, on average.
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 $1.03 billion, down 6.76% year on year, in line with analyst expectations. Despite the stock rising on the results, it was a weaker quarter for the company, with a slow revenue growth and a decline in gross margin.
Bob Bruggeworth, President and Chief Executive Officer of Qorvo, said, “Qorvo is executing well and delivering solid results despite macroeconomic headwinds. We are investing in product and technology leadership across our businesses and expanding our reach in higher growth end markets, such as IoT connectivity, power management, power conversion and defense. The global macrotrends supporting our markets, including connectivity, digitization and electrification, increasingly rely on Qorvo’s technologies to address critical efficiency, throughput and form factor requirements.”
The stock is down 25.6% since the results and currently trades at $79.43.
Best 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 $6.55 billion, up 70.1% year on year, in line with analyst expectations. It was a decent quarter for the company, with a significant improvement in gross margin but an underwhelming revenue guidance for the next quarter.
AMD achieved the fastest revenue growth and highest full year guidance raise among its peers. The stock is down 35.6% since the results and currently trades at $63.86.
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Weakest Q2: Intel (NASDAQ:INTC)
Inventor of the x86 processor that powered decades of technological innovation in PCs, data centers, and numerous other markets, Intel (NASDAQ: INTC) is the leading manufacturer of computer processors and graphics chips.
Intel reported revenues of $15.3 billion, down 22% year on year, missing analyst expectations by 14.5%. It was a weak quarter for the company, with revenue guidance for both the next quarter and full year missing analysts' expectations.
Intel had the weakest performance against analyst estimates, slowest revenue growth, and weakest full year guidance update in the group. The stock is down 34.1% since the results and currently trades at $26.14.
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 $8.46 billion, up 24.8% year on year, in line with analyst expectations. It was a mixed quarter for the company, with a strong sales guidance for the next quarter but an increase in inventory levels.
The stock is down 9.05% since the results and currently trades at $447.59.
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 $10.9 billion, up 35.6% year on year, in line with analyst expectations. Despite the strong topline growth, it was a slower quarter for the company, with an underwhelming revenue guidance for the next quarter and an increase in inventory levels.
Qualcomm achieved the strongest analyst estimates beat among the peers. The stock is down 25.3% since the results and currently trades at $114.41.
The author has no position in any of the stocks mentioned