Late last month, President Joe Biden signed an executive order to kick-start the implementation of the $280 billion CHIPS and Science Act, aimed at boosting the U.S. domestic chip-making market. The United States has also been encouraging foreign tech firms to manufacture in the country and expects an arrangement with Taiwan.
Moreover, the World Semiconductor Trade Statistics (WSTS) has forecasted the global semiconductor market to register another double-digit growth this year. The worldwide market is estimated to increase by 13.9% in 2022 and 4.6% in 2023.
Recently, popular semiconductor company Advanced Micro Devices, Inc. (AMD) reported receiving instructions from U.S. Officials to stop exporting its artificial intelligence chips to China. The new license requirements prevent the shipment of its MI250 chips to the country.
For the second quarter that ended June 25, 2022, AMD’s net revenue came in at $6.55 billion, up 70.1% year-over-year. However, its operating income decreased 36.7% year-over-year to $526 million. Its net income came in at $447 million, declining 37% year-over-year.
Moreover, AMD has registered weak momentum over the past months. It has declined 20% over the past month and 32.3% over the past six months to close its last trading session at $76.77. It is trading below its 50-Day Moving Average of $89.00 and its 200-Day Moving Average of $105.23.
Thus, we believe investors looking to invest in quality semiconductor stocks could consider buying Broadcom Inc. (AVGO), NXP Semiconductors N.V. (NXPI), STMicroelectronics N.V. (STM), and Axcelis Technologies, Inc. (ACLS) instead of AMD.
Broadcom Inc. (AVGO)
AVGO creates, manufactures, and distributes a range of semiconductor products globally. The company operates in two segments, Semiconductor Solutions, and Infrastructure Software.
On September 6, AVGO announced the delivery of its Trident 4C Ethernet switch ASIC, 12.8 terabits/second security switch. This product is equipped to detect flow anomalies in real time as a part of a rapid cyber-threat defense. This might benefit the company.
In August, AVGO and Tencent Holdings Ltd. (TCEHY) announced a strategic partnership to accelerate the adoption of high bandwidth co-packaged optics (CPO) network switches for cloud infrastructure. This innovation is expected to bolster the company’s market position.
AVGO’s net revenues grew 24.9% year-over-year to $8.46 billion for the third quarter ended July 31, 2022. Its adjusted EBITDA rose 30.4% from its prior-year quarter to $5.38 billion. The company’s non-GAAP net income came in at $4.24 billion, up 35.8% year-over-year, while its EPS increased 39.8% year-over-year to $9.73.
Analysts expect AVGO’s revenue to increase 20.2% year-over-year to $8.91 billion in the fiscal fourth quarter ending October 2022. Its EPS is expected to increase 31.8% year-over-year to $10.30 in the same quarter. It surpassed EPS estimates in all four trailing quarters, which is impressive.
Over the past three months, the stock has gained marginally to close the last trading session at $501.84.
AVGO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating which indicates a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
AVGO has an A grade for Quality and a B grade for Growth and Sentiment. In the B-rated Semiconductor & Wireless Chip industry, it is ranked #4 out of 93 stocks.
Beyond what we’ve stated above, we have also given AVGO grades for Value, Momentum, and Stability. Get all AVGO ratings here.
NXP Semiconductors N.V. (NXPI)
NXPI, based in Eindhoven, the Netherlands, offers various semiconductor products. The company sells its products to various original equipment manufacturers, contract manufacturers, and distributors.
On August 25, NXPI’s board of directors approved the payment of an interim dividend of $0.845 per ordinary share for the third quarter of 2022, payable to shareholders on October 6. This reflects upon the company’s shareholder return ability.
On July 20, NXPI announced that it had signed a memorandum of understanding with Hon Hai Technology Group (Foxconn) to jointly develop…
Continue reading at STOCKNEWS.com