Earnings results often indicate what direction a company will take in the months ahead. With Q1 now behind us, let’s have a look at Allegro MicroSystems (NASDAQ:ALGM) 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 8 processors and graphics chips stocks we track reported a mixed Q1; on average, revenues beat analyst consensus estimates by 1.3%. while next quarter’s revenue guidance was 5% below consensus. Stocks–especially those trading at higher multiples–had a strong end of 2023, but 2024 has seen periods of volatility. Mixed signals about inflation have led to uncertainty around rate cuts, and processors and graphics chips stocks have held roughly steady amidst all this, with share prices up 2.1% on average since the previous 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 $240.6 million, down 10.7% year on year, topping analysts’ expectations by 2.4%. It was a weaker quarter for the company, with underwhelming revenue guidance for the next quarter and a decline in its operating margin.
“Continued strong momentum in e-Mobility drove record fiscal year 2024 sales to more than $1 billion and record non-GAAP earnings per share of $1.35. We also achieved a record level of design wins of more than $1 billion. I would like to thank the entire Allegro team for their contributions which enabled us to achieve these significant milestones,” said Vineet Nargolwala, President and CEO of Allegro.
The stock is up 5.7% since the results and currently trades at $31.05.
Read our full report on Allegro MicroSystems here, it’s free.
Best Q1: 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 $26.04 billion, up 262% year on year, outperforming analysts’ expectations by 5.9%. It was an exceptional quarter for the company. Its revenue and EPS outperformed Wall Street’s estimates, driven by better-than-expected results in its data center and automotive segments; the result in its automotive segment (17% year-on-year revenue growth) was especially impressive given the industry is in a cyclical downturn and many other semiconductor companies have posted year-on-year declines for that end market.
Nvidia pulled off the biggest analyst estimates beat and fastest revenue growth among its peers. The stock is up 15.2% since the results and currently trades at $1,092.6.
Is now the time to buy Nvidia? Access our full analysis of the earnings results here, it’s free.
Weakest Q1: 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 $140.8 million, down 23.6% year on year, in line with analysts’ expectations. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter and a decline in its operating margin.
The stock is down 0.2% since the results and currently trades at $76.75.
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 $941 million, up 48.7% year on year, surpassing analysts’ expectations by 1.6%. It was a mixed quarter for the company, with a significant improvement in its gross margin and an impressive beat of analysts’ EPS estimates. On the other hand, its revenue guidance for next quarter missed analysts’ expectations and its inventory levels increased.
The stock is down 12% since the results and currently trades at $98.44.
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 1.3% year on year, in line with analysts’ expectations. It was a decent quarter for the company, with a solid beat of analysts’ EPS estimates but an increase in its inventory levels.
The stock is up 31% since the results and currently trades at $215.07.
Read our full, actionable report on Qualcomm here, it’s free.
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