As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q3. Today, we are looking at processors and graphics chips stocks, starting with Broadcom (NASDAQ:AVGO).
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 strong Q3. As a group, revenues beat analysts’ consensus estimates by 2.5% while next quarter’s revenue guidance was 12,447% above.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 7.5% since the latest earnings results.
Broadcom (NASDAQ:AVGO)
Originally the semiconductor division of Hewlett Packard, Broadcom (NASDAQ:AVGO) is a semiconductor conglomerate spanning wireless communications, networking, and data storage as well as infrastructure software focused on mainframes and cybersecurity.
Broadcom reported revenues of $18.02 billion, up 28.2% year on year. This print exceeded analysts’ expectations by 3%. Overall, it was a very strong quarter for the company with a significant improvement in its inventory levels and revenue guidance for next quarter beating analysts’ expectations.
"In Q4, record revenue of $18.0 billion grew 28% year-over-year, driven primarily by AI semiconductor revenue increasing 74% year-over-year," said Hock Tan, President and CEO of Broadcom Inc.
The stock is down 13.8% since reporting and currently trades at $350.35.
Best Q3: Qorvo (NASDAQ:QRVO)
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 $1.06 billion, up 1.1% year on year, outperforming analysts’ expectations by 1.9%. The business had an exceptional quarter with a significant improvement in its inventory levels and revenue guidance for next quarter exceeding analysts’ expectations.
Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 9% since reporting. It currently trades at $86.27.
Is now the time to buy Qorvo? Access our full analysis of the earnings results here, it’s free for active Edge members.
Weakest 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 $214.3 million, up 14.4% year on year, exceeding analysts’ expectations by 1.4%. Still, it was a mixed quarter as it posted EPS in line with analysts’ estimates.
As expected, the stock is down 10.6% since the results and currently trades at $27.47.
Read our full analysis of Allegro MicroSystems’s results here.
Qualcomm (NASDAQ:QCOM)
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 $11.27 billion, up 10% year on year. This number topped analysts’ expectations by 4.8%. It was an exceptional quarter as it also put up a significant improvement in its inventory levels and revenue guidance for next quarter exceeding analysts’ expectations.
The stock is flat since reporting and currently trades at $174.75.
Read our full, actionable report on Qualcomm here, it’s free for active Edge members.
AMD (NASDAQ:AMD)
Founded in 1969 by a group of former Fairchild semiconductor executives led by Jerry Sanders, Advanced Micro Devices (NASDAQ:AMD) is one of the leading designers of computer processors and graphics chips used in PCs and data centers.
AMD reported revenues of $9.25 billion, up 35.6% year on year. This result beat analysts’ expectations by 5.6%. Overall, it was a strong quarter as it also logged an impressive beat of analysts’ revenue estimates and revenue guidance for next quarter beating analysts’ expectations.
AMD achieved the biggest analyst estimates beat among its peers. The stock is down 13.9% since reporting and currently trades at $215.25.
Read our full, actionable report on AMD here, it’s free for active Edge members.
Market Update
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
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