Reflecting On Processors and Graphics Chips Stocks’ Q2 Earnings: Broadcom (NASDAQ:AVGO)

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 processors and graphics chips industry, including Broadcom (NASDAQ:AVGO) and its peers.

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 were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 14.3% 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 2.5% since the latest earnings results.

Broadcom (NASDAQ:AVGO)

Originally the semiconductor division of Hewlett Packard, Broadcom (NASDAQ:AVGO) is a semiconductor conglomerate that spans wireless, networking, data storage, and industrial end markets along with an infrastructure software business focused on mainframes and cybersecurity.

Broadcom reported revenues of $13.07 billion, up 47.3% year on year. This print was in line with analysts’ expectations, and overall, it was a satisfactory quarter for the company with a solid beat of analysts’ EBITDA estimates but underwhelming revenue guidance for the next quarter.

"Broadcom's third quarter results reflect continued strength in our AI semiconductor solutions and VMware. We expect revenue from AI to be $12 billion for fiscal year 2024 driven by Ethernet networking and custom accelerators for AI data centers," said Hock Tan, President and CEO of

Interestingly, the stock is up 13.3% since reporting and currently trades at $173.26.

Is now the time to buy Broadcom? Access our full analysis of the earnings results 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’ EBITDA estimates.

Nvidia achieved the biggest analyst estimates beat and fastest revenue growth among its peers. The market seems happy with the results as the stock is up 12% since reporting. It currently trades at $140.77.

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 1.8% since the results and currently trades at $53.93.

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 the leading manufacturer of computer processors and graphics chips.

Intel reported revenues of $12.83 billion, flat year on year. This print missed analysts’ expectations by 1.1%. Overall, it was a disappointing quarter as it also logged underwhelming revenue guidance for the next quarter and a decline in its operating margin.

The stock is down 23.4% since reporting and currently trades at $22.32.

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

SMART (NASDAQ:SGH)

Based in the US, SMART Global Holdings (NASDAQ:SGH) is a diversified semiconductor company offering memory, digital, and LED products.

SMART reported revenues of $311.1 million, down 1.7% year on year. This number lagged analysts' expectations by 4.3%. Overall, it was a softer quarter as it also produced underwhelming earnings guidance for the full year and a miss of analysts’ EPS estimates.

The stock is flat since reporting and currently trades at $21.

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

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