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 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 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. Tech multiples have reverted to the historical mean after reaching all time levels in early 2021, but processors and graphics chips stocks held their ground better than others, with the share prices up 17.4% 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 $1.15 billion, down 7.74% year on year, beating analyst expectations by 2.45%. It was a weak quarter for the company, with declining revenue and underwhelming guidance for the next quarter.
Bob Bruggeworth, president and chief executive officer of Qorvo, said, “Qorvo delivered a solid September quarter, supported by a large customer launch and strength in defense and power. In the December quarter, Qorvo is continuing to adjust to weakening end-market demand while taking steps to significantly reduce inventory in the channel. Across our businesses, we remain encouraged by customer design win activity and content and integration trends. We are introducing new technologies and new products to drive growth and expand content in diverse markets, including defense, power, infrastructure, automotive, IoT connectivity and smartphones.”
The stock is up 20.4% since the results and currently trades at $102.21.
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 MicroSystems achieved the strongest analyst estimates beat among its peers. The stock is up 43.4% since the results and currently trades at $32.5.
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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 declining revenue and underwhelming revenue guidance for the next quarter.
The stock is up 12.7% since the results and currently trades at $179.75.
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 7.28% since the results and currently trades at $570.21.
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 9.17% since the results and currently trades at $122.90.
The author has no position in any of the stocks mentioned