Spotting Winners: MACOM (NASDAQ:MTSI) And Analog Semiconductors Stocks In Q2

Let’s dig into the relative performance of MACOM (NASDAQ:MTSI) and its peers as we unravel the now-completed Q2 analog semiconductors earnings season.

Demand for analog chips is generally linked to the overall level of economic growth, as analog chips serve as the building blocks of most electronic goods and equipment. Unlike digital chip designers, analog chip makers tend to produce the majority of their own chips, as analog chip production does not require expensive leading edge nodes. Less dependent on major secular growth drivers, analog product cycles are much longer, often 5-7 years.

The 15 analog semiconductors stocks we track reported a mixed Q2. As a group, revenues beat analysts’ consensus estimates by 1% while next quarter’s revenue guidance was 1.2% below.

Big picture, the Federal Reserve has a dual mandate of inflation and employment. The former had been running hot throughout 2021 and 2022 but cooled towards the central bank's 2% target as of late. This prompted the Fed to cut its policy rate by 50bps (half a percent) in September 2024. Given recent employment data that suggests the US economy could be wobbling, the markets will be assessing whether this rate and future cuts (the Fed signaled more to come in 2024 and 2025) are the right moves at the right time or whether they're too little, too late for a macro that has already cooled.

In light of this news, analog semiconductors stocks have held steady with share prices up 1.6% on average since the latest earnings results.

MACOM (NASDAQ:MTSI)

Founded in the 1950s as Microwave Associates, a communications supplier to the US Army Signal Corp, today MACOM Technology Solutions (NASDAQ: MTSI) is a provider of analog chips used in optical, wireless, and satellite networks.

MACOM reported revenues of $190.5 million, up 28.3% year on year. This print was in line with analysts’ expectations, but overall, it was a slower quarter for the company with a decline in its gross margin and an increase in its inventory levels.

“We remain focused on engineering excellence, financial performance and execution,” said Stephen G. Daly, President and Chief Executive Officer.

MACOM achieved the fastest revenue growth of the whole group. Unsurprisingly, the stock is up 12.5% since reporting and currently trades at $113.67.

Is now the time to buy MACOM? Access our full analysis of the earnings results here, it’s free.

Best Q2: Himax (NASDAQ:HIMX)

Taiwan-based Himax Technologies (NASDAQ:HIMX) is a leading manufacturer of display driver chips and timing controllers used in TVs, laptops, and mobile phones.

Himax reported revenues of $239.6 million, up 2% year on year, outperforming analysts’ expectations by 2.9%. The business had an exceptional quarter with a significant improvement in its gross margin and a significant improvement in its operating margin.

The market seems happy with the results as the stock is up 7.3% since reporting. It currently trades at $6.29.

Is now the time to buy Himax? Access our full analysis of the earnings results here, it’s free.

Weakest Q2: Microchip Technology (NASDAQ:MCHP)

Spun out from General Instrument in 1987, Microchip Technology (NASDAQ: MCHP) is a leading provider of microcontrollers and integrated circuits used mainly in the automotive world, especially in electric vehicles and their charging devices.

Microchip Technology reported revenues of $1.24 billion, down 45.8% year on year, in line with analysts’ expectations. It was a softer quarter as it posted underwhelming revenue guidance for the next quarter and a decline in its operating margin.

Microchip Technology delivered the slowest revenue growth in the group. As expected, the stock is down 8.9% since the results and currently trades at $76.95.

Read our full analysis of Microchip Technology’s results here.

Sensata Technologies (NYSE:ST)

Originally a temperature sensor control maker and a subsidiary of Texas Instruments for 60 years, Sensata Technology Holdings (NYSE: ST) is a leading supplier of analog sensors used in industrial and transportation applications, best known for its dominant position in the tire pressure monitoring systems in cars.

Sensata Technologies reported revenues of $1.04 billion, down 2.5% year on year. This number met analysts’ expectations. Aside from that, it was a slower quarter as it recorded underwhelming revenue guidance for the next quarter and a decline in its gross margin.

The stock is down 5.3% since reporting and currently trades at $35.91.

Read our full, actionable report on Sensata Technologies here, it’s free.

Universal Display (NASDAQ:OLED)

Serving major consumer electronics manufacturers, Universal Display (NASDAQ:OLED) is a provider of organic light emitting diode (OLED) technologies used in display and lighting applications.

Universal Display reported revenues of $158.5 million, up 8.1% year on year. This print met analysts’ expectations. Zooming out, it was a slower quarter as it recorded a miss of analysts’ EPS estimates and an increase in its inventory levels.

The stock is down 2.3% since reporting and currently trades at $207.60.

Read our full, actionable report on Universal Display here, it’s free.

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