As the Q2 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the semiconductor manufacturing industry, including Teradyne (NASDAQ: TER) and its peers.
The semiconductor industry is driven by demand for advanced electronic products like smartphones, PCs, servers, and data storage. The need for technologies like artificial intelligence, 5G networks, and smart cars is also creating the next wave of growth for the industry. Keeping up with this dynamism requires new tools that can design, fabricate, and test chips at ever smaller sizes and more complex architectures, creating a dire need for semiconductor capital manufacturing equipment.
The 14 semiconductor manufacturing stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 3.8% while next quarter’s revenue guidance was in line.
Luckily, semiconductor manufacturing stocks have performed well with share prices up 26.2% on average since the latest earnings results.
Teradyne (NASDAQ: TER)
Sporting most major chip manufacturers as its customers, Teradyne (NASDAQ: TER) is a US-based supplier of automated test equipment for semiconductors as well as other technologies and devices.
Teradyne reported revenues of $651.8 million, down 10.7% year on year. This print was in line with analysts’ expectations, but overall, it was a mixed quarter for the company with a beat of analysts’ EPS estimates but revenue guidance for next quarter slightly missing analysts’ expectations.
“Our Semiconductor Test Group drove better than expected results in the second quarter. System-on-a-Chip (SOC), primarily for artificial intelligence applications, was the strongest growth driver,” said Teradyne CEO, Greg Smith.
Interestingly, the stock is up 51.2% since reporting and currently trades at $137.
Is now the time to buy Teradyne? Access our full analysis of the earnings results here, it’s free.
Best Q2: IPG Photonics (NASDAQ: IPGP)
Both a designer and manufacturer of its products, IPG Photonics (NASDAQ: IPGP) is a provider of high-performance fiber lasers used for cutting, welding, and processing raw materials.
IPG Photonics reported revenues of $250.7 million, down 2.7% year on year, outperforming analysts’ expectations by 9.4%. The business had an exceptional quarter with a beat of analysts’ EPS and adjusted operating income estimates.
The market seems content with the results as the stock is up 2% since reporting. It currently trades at $79.19.
Is now the time to buy IPG Photonics? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: FormFactor (NASDAQ: FORM)
With customers across the foundry and fabless markets, FormFactor (NASDAQ: FORM) is a US-based provider of test and measurement technologies for semiconductors.
FormFactor reported revenues of $195.8 million, flat year on year, exceeding analysts’ expectations by 3.4%. Still, it was a slower quarter as it posted a significant miss of analysts’ EPS and adjusted operating income estimates.
Interestingly, the stock is up 5.8% since the results and currently trades at $36.42.
Read our full analysis of FormFactor’s results here.
Photronics (NASDAQ: PLAB)
Sporting a global footprint of facilities, Photronics (NASDAQ: PLAB) is a manufacturer of photomasks, templates used to transfer patterns onto semiconductor wafers.
Photronics reported revenues of $210.4 million, flat year on year. This number topped analysts’ expectations by 3%. Taking a step back, it was a satisfactory quarter as it also recorded a beat of analysts’ EPS estimates but revenue guidance for next quarter slightly missing analysts’ expectations.
The stock is up 3.6% since reporting and currently trades at $23.09.
Read our full, actionable report on Photronics here, it’s free.
KLA Corporation (NASDAQ: KLAC)
Formed by the 1997 merger of the two leading semiconductor yield management companies, KLA Corporation (NASDAQ: KLAC) is the leading supplier of equipment used to measure and inspect semiconductor chips.
KLA Corporation reported revenues of $3.17 billion, up 23.6% year on year. This print beat analysts’ expectations by 3%. Overall, it was a strong quarter as it also produced a beat of analysts’ EPS estimates and an impressive beat of analysts’ adjusted operating income estimates.
The stock is up 22.2% since reporting and currently trades at $1,075.
Read our full, actionable report on KLA Corporation 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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