As the Q1 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 Nvidia (NASDAQ:NVDA) 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 an ok Q1; on average, revenues beat analyst consensus estimates by 1.6%. while next quarter's revenue guidance was 5% below consensus. Stocks, especially growth stocks where cash flows further in the future are more important to the story, had a good end of 2023. But the beginning of 2024 has seen more volatile stock performance due to mixed inflation data, and processors and graphics chips stocks have held roughly steady amidst all this, with share prices up 1.9% on average since the previous earnings results.
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, topping analysts' expectations by 6%. It was an exceptional quarter for the company, with a significant improvement in its gross margin and an impressive beat of analysts' EPS estimates.
“The next industrial revolution has begun — companies and countries are partnering with NVIDIA to shift the trillion-dollar traditional data centers to accelerated computing and build a new type of data center — AI factories — to produce a new commodity: artificial intelligence,” said Jensen Huang, founder and CEO of NVIDIA.
Nvidia scored the biggest analyst estimates beat and fastest revenue growth of the whole group. The stock is up 30.6% since the results and currently trades at $123.89.
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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, outperforming analysts' expectations by 1.6%. It was a solid quarter for the company, with a significant improvement in its gross margin and an impressive beat of analysts' EPS estimates.
The stock is up 5.3% since the results and currently trades at $117.79.
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.
The stock is down 24.3% since the results and currently trades at $58.23.
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 $12.49 billion, up 43% year on year, surpassing analysts' expectations by 4%. It was a mixed quarter for the company, with a miss of analysts' EPS estimates.
The stock is up 9.8% since the results and currently trades at $1,640.5.
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, surpassing analysts' expectations by 2.4%. It was a weaker quarter for the company, with underwhelming revenue guidance for the next quarter.
The stock is down 5.3% since the results and currently trades at $27.81.
