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 Q1. Today, we are looking at processors and graphics chips stocks, starting with Nvidia (NASDAQ: NVDA).
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 24.5% on average since the latest earnings results.
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 print exceeded analysts’ expectations by 1.8%. Overall, it was a strong quarter for the company with a significant improvement in its inventory levels and a solid beat of analysts’ EPS estimates.
“Our breakthrough Blackwell NVL72 AI supercomputer — a ‘thinking machine’ designed for reasoning— is now in full-scale production across system makers and cloud service providers,” said Jensen Huang, founder and CEO of NVIDIA.
Nvidia scored the fastest revenue growth of the whole group. Unsurprisingly, the stock is up 18.1% since reporting and currently trades at $159.25.
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, outperforming analysts’ expectations by 6.1%. The business had a stunning quarter with a significant improvement in its inventory levels and a solid beat of analysts’ EPS estimates.
Penguin Solutions achieved the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 17.5% since reporting. It currently trades at $21.20.
Is now the time to buy Penguin Solutions? 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 4.8% since the results and currently trades at $50.50.
Read our full analysis of Lattice Semiconductor’s results here.
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. This number beat analysts’ expectations by 4.3%. Overall, it was a very strong quarter as it also logged a significant improvement in its inventory levels and an impressive beat of analysts’ EPS estimates.
Allegro MicroSystems had the slowest revenue growth among its peers. The stock is up 88.1% since reporting and currently trades at $35.15.
Read our full, actionable report on Allegro MicroSystems here, it’s free.
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%. Taking a step back, it was a satisfactory quarter as it also recorded a solid beat of analysts’ adjusted operating income estimates but an increase in its inventory levels.
The stock is up 40% since reporting and currently trades at $137.93.
Read our full, actionable report on AMD 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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