Processors and Graphics Chips Stocks Q2 Results: Benchmarking Allegro MicroSystems (NASDAQ:ALGM)
The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how processors and graphics chips stocks fared in Q2, starting with Allegro MicroSystems (NASDAQ:ALGM).
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 mixed Q2. As a group, revenues beat analysts’ consensus estimates by 0.9% while next quarter’s revenue guidance was 12.9% below.
After much suspense, the Federal Reserve cut its policy rate by 50bps (half a percent) in September 2024. This marks the central bank’s first easing of monetary policy since 2020 and the end of its most pointed inflation-busting campaign since the 1980s. Inflation had begun to run hot in 2021 post-COVID due to a confluence of factors such as supply chain disruptions, labor shortages, and stimulus spending. While CPI (inflation) readings have been supportive lately, employment measures have prompted some concern. Going forward, the markets will debate whether this rate cut (and more potential ones in 2024 and 2025) is perfect timing to support the economy or a bit too late for a macro that has already cooled too much.
While some processors and graphics chips stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 4.9% 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 $166.9 million, down 40% year on year. This print exceeded analysts’ expectations by 1.2%. Despite the top-line beat, it was still a slower quarter for the company with a decline in its operating margin.
“We delivered results toward the higher end of our commitments while making progress on inventory rebalancing across the Automotive and Industrial markets. First quarter sales were $167 million, above the midpoint of our outlook, and non-GAAP EPS was $0.03, at the high end of our outlook,” said Vineet Nargolwala, President and CEO of Allegro.
Allegro MicroSystems delivered the slowest revenue growth of the whole group. Unsurprisingly, the stock is down 10.2% since reporting and currently trades at $21.59.
Read our full report on Allegro MicroSystems here, it’s free.
Best Q2: 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 $30.04 billion, up 122% year on year, outperforming analysts’ expectations by 4.5%. The business had an exceptional quarter with a significant improvement in its inventory levels and an impressive beat of analysts’ EPS estimates.
Nvidia delivered the biggest analyst estimates beat and fastest revenue growth among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 4.8% since reporting. It currently trades at $119.64.
Is now the time to buy Nvidia? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: 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 $124.1 million, down 34.7% year on year, falling short of analysts’ expectations by 4.7%. It was a disappointing quarter as it posted underwhelming revenue guidance for the next quarter and a decline in its operating margin.
Lattice Semiconductor delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 5.4% since the results and currently trades at $51.95.
Read our full analysis of Lattice Semiconductor’s results here.
Qorvo (NASDAQ:QRVO)
Formed by the merger of TriQuint and RF Micro Devices, Qorvo (NASDAQ: QRVO) is a designer and manufacturer of RF chips used in almost all smartphones globally, along with a variety of chips used in networking equipment and infrastructure.
Qorvo reported revenues of $886.7 million, up 36.2% year on year. This number beat analysts’ expectations by 4.1%. It was a strong quarter as it also put up an impressive beat of analysts’ EPS estimates and a significant improvement in its operating margin.
The stock is down 13.8% since reporting and currently trades at $102.89.
Read our full, actionable report on Qorvo here, it’s free.
Qualcomm (NASDAQ:QCOM)
Having been at the forefront of developing the standards for cellular connectivity for over four decades, Qualcomm (NASDAQ:QCOM) is a leading innovator and a fabless manufacturer of wireless technology chips used in smartphones, autos and internet of things appliances.
Qualcomm reported revenues of $9.39 billion, up 11.1% year on year. This result surpassed analysts’ expectations by 1.9%. Overall, it was a strong quarter as it also produced a decent beat of analysts’ EPS estimates and strong sales guidance for the next quarter.
The stock is down 7.3% since reporting and currently trades at $167.49.
Read our full, actionable report on Qualcomm here, it’s free.
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