Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at Allegro MicroSystems (NASDAQ: ALGM) and the best and worst performers in the processors and graphics chips industry.
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 2.7% while next quarter’s revenue guidance was 0.5% below.
Luckily, processors and graphics chips stocks have performed well with share prices up 11.1% on average since the latest earnings results.
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 print exceeded analysts’ expectations by 4.3%. Overall, it was a very strong quarter for the company with a significant improvement in its inventory levels and an impressive beat of analysts’ EPS estimates.
“During the fourth quarter, we delivered on our commitments with sales of $193 million, up 8% sequentially, and non-GAAP EPS of $0.06,” said Mike Doogue, President and CEO of Allegro.
Allegro MicroSystems delivered the slowest revenue growth of the whole group. The stock is up 55.6% since reporting and currently trades at $29.09.
Is now the time to buy Allegro MicroSystems? Access our full analysis of the earnings results here, it’s free.
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 pulled off the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 12.1% since reporting. It currently trades at $20.24.
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 11.4% since the results and currently trades at $47.
Read our full analysis of Lattice Semiconductor’s results here.
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 $12.67 billion, flat year on year. This result topped analysts’ expectations by 2.6%. Zooming out, it was a satisfactory quarter as it also logged a solid beat of analysts’ EPS estimates but an increase in its inventory levels.
The stock is down 6% since reporting and currently trades at $20.19.
Read our full, actionable report on Intel 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 print 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 a solid beat of analysts’ EPS estimates.
Nvidia scored the fastest revenue growth among its peers. The stock is up 5.2% since reporting and currently trades at $141.80.
Read our full, actionable report on Nvidia here, it’s free.
Market Update
Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.
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