Let’s dig into the relative performance of Penguin Solutions (NASDAQ: PENG) and its peers as we unravel the now-completed Q1 processors and graphics chips earnings season.
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 Q1. As a group, revenues beat analysts’ consensus estimates by 2.6% while next quarter’s revenue guidance was 0.5% below.
Luckily, processors and graphics chips stocks have performed well with share prices up 22.3% on average since the latest earnings results.
Best Q1: Penguin Solutions (NASDAQ: PENG)
Based in the US, Penguin Solutions (NASDAQ: PENG) is a diversified semiconductor company offering memory, digital, and LED products.
Penguin Solutions reported revenues of $365.5 million, up 28.3% year on year. This print exceeded analysts’ expectations by 6.1%. Overall, it was a stunning quarter for the company with a significant improvement in its inventory levels and a solid beat of analysts’ EPS estimates.
“We are pleased with the progress we are making in fiscal year 2025,” said Mark Adams, Chief Executive Officer (“CEO”) of Penguin Solutions.
Penguin Solutions pulled off the biggest analyst estimates beat of the whole group. Unsurprisingly, the stock is up 16.3% since reporting and currently trades at $21.
Is now the time to buy Penguin Solutions? Access our full analysis of the earnings results 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 $192.8 million, down 19.9% year on year, outperforming analysts’ expectations by 4.3%. The business had a very strong quarter with a significant improvement in its inventory levels and an impressive beat of analysts’ EPS estimates.
The market seems happy with the results as the stock is up 81% since reporting. It currently trades at $33.83.
Is now the time to buy Allegro MicroSystems? Access our full analysis of the earnings results here, it’s free.
Weakest Q1: Lattice Semiconductor (NASDAQ: LSCC)
A global leader in its category, Lattice Semiconductor (NASDAQ: LSCC) is a semiconductor designer specializing in customer-programmable chips that enhance CPU performance for intensive tasks such as machine learning.
Lattice Semiconductor reported revenues of $120.2 million, down 14.7% year on year, in line with analysts’ expectations. It was a slower quarter as it posted an increase in its inventory levels and a slight miss of analysts’ adjusted operating income estimates.
As expected, the stock is down 8.3% since the results and currently trades at $48.66.
Read our full analysis of Lattice Semiconductor’s results here.
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 $7.44 billion, up 35.9% year on year. This print topped analysts’ expectations by 4.4%. Zooming out, it was a satisfactory quarter as it also logged a solid beat of analysts’ adjusted operating income estimates but an increase in its inventory levels.
The stock is up 43.5% since reporting and currently trades at $141.39.
Read our full, actionable report on AMD here, it’s free.
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 $44.06 billion, up 69.2% year on year. This result beat analysts’ expectations by 1.8%. Overall, it was a strong quarter as it also put up a significant improvement in its inventory levels and an impressive beat of analysts’ EPS estimates.
Nvidia pulled off the fastest revenue growth among its peers. The stock is up 16.8% since reporting and currently trades at $157.53.
Read our full, actionable report on Nvidia here, it’s free.
Market Update
Thanks to the Fed’s series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% in November), and a notable surge followed Donald Trump’s presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by potential trade policy changes and corporate tax discussions, which could impact business confidence and growth. The path forward holds both optimism and caution as new policies take shape.
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