Earnings results often indicate what direction a company will take in the months ahead. With Q2 behind us, let’s have a look at Broadcom (NASDAQ: AVGO) 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 9 processors and graphics chips stocks we track reported a mixed Q2. As a group, revenues beat analysts’ consensus estimates by 2.1% while next quarter’s revenue guidance was in line.
Thankfully, share prices of the companies have been resilient as they are up 8.2% on average 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 $15.95 billion, up 22% year on year. This print was in line with analysts’ expectations, but overall, it was a mixed quarter for the company with a meaningful improvement in its inventory levels.
Interestingly, the stock is up 17.9% since reporting and currently trades at $360.80.
Is now the time to buy Broadcom? Access our full analysis of the earnings results here, it’s free.
Best Q2: 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 $818.8 million, down 7.7% year on year, outperforming analysts’ expectations by 5.3%. The business had a very strong quarter with a beat of analysts’ EPS estimates and an impressive beat of analysts’ adjusted operating income estimates.
The market seems content with the results as the stock is up 2.9% since reporting. It currently trades at $86.95.
Is now the time to buy Qorvo? Access our full analysis of the earnings results here, it’s free.
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 a leading manufacturer of computer processors and graphics chips.
Intel reported revenues of $12.86 billion, flat year on year, exceeding analysts’ expectations by 7.8%. Still, it was a slower quarter as it posted a significant miss of analysts’ adjusted operating income and EPS estimates.
Interestingly, the stock is up 11.7% since the results and currently trades at $25.26.
Read our full analysis of Intel’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 $10.37 billion, up 10.3% year on year. This number was in line with analysts’ expectations. Zooming out, it was a mixed quarter as it also logged an impressive beat of analysts’ adjusted operating income estimates but an increase in its inventory levels.
The stock is up 3.3% since reporting and currently trades at $164.17.
Read our full, actionable report on Qualcomm here, it’s free.
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 $203.4 million, up 21.9% year on year. This result surpassed analysts’ expectations by 2.8%. Aside from that, it was a mixed quarter as it also recorded a solid beat of analysts’ adjusted operating income estimates but a significant miss of analysts’ EPS estimates.
The stock is down 10.6% since reporting and currently trades at $30.28.
Read our full, actionable report on Allegro MicroSystems here, it’s free.
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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