Semiconductor stocks: Why Nvidia, Marvell, Taiwan Semiconductor and Broadcom share price zoomed?
Semiconductor stocks have been the talk of the town over the past few weeks. In this blog, we discuss how semiconductor stocks’ earnings performance has been and how AI developments are rapidly changing the sector?
It started when Nvidia released their earnings report for the first quarter of fiscal year 2024.
On face value, Nvidia’s revenue and net profit slipped for the quarter ending March 2023, but it was its strong earnings outlook that not only pushed its share price higher but also pushed share prices of most semiconductor shares like Broadcom, Taiwan Semiconductor, Texas Instruments and Marvell Technologies.
Semiconductor shares: Earnings Performance
Nvidia sales dropped by 13% compared to the Jan-March period in 2022, which may seem concerning, but analysts had anticipated an even larger decline.
Additionally, Nvidia managed to reduce their operating costs by 30%, resulting in a remarkable 28% increase in earnings, surpassing expectations by 16%.
Furthermore, Nvidia achieved a new revenue record of $4.3 billion from their data center division due to the increased demand for AI-capable chips.
The company's management foresees extraordinary growth, with total sales projected to reach $11 billion in the current fiscal Q2 2024, representing a 64% surge.
However, Nvidia is not the sole semiconductor company benefiting from the rise of AI.
Marvell Technology also experienced a slight slowdown in sales and profits for the March 2023 quarter, however strong earnings forecasts for upcoming quarters also gave a fillip to Marvell share prices.
However, when it comes to Intel shares, the company clearly has been the biggest loser among its chipmaking peers as it somewhat seems to be lagging behind in the AI race.
Texas Instruments and Taiwan Semiconductors make the components used in graphic processors and are suppliers to Nvidia, which is the reason their stock prices have jumped this year.
Semiconductor shares: Earnings Comparison
Below are the revenues, profits and dividends for individual firms' latest quarter (ending March/April 2023).
|Revenue||YoY % change||Profits||Dividend (latest)||P/E ratio (LTM)|
|Nvidia||$7.2 billion||13%||$2 billion||4 cents per share||139.5|
|AMD||$5.3 billion||9%||-$139 million||-||39.9|
|Broadcom||$8.7 billion||8%||$3.5 billion||$4.6 per share||21.2|
|Taiwan Semiconductor||$16.7 billion||4%||$6.8 billion||-||16|
|Texas Instruments||$4.8 billion||11%||$1.7 billion||$1.2 per share||20|
|Marvell Technologies||$1.3 billion||9%||-$169 million||6 cents per share||32|
|Qualcomm||$9.3 billion||17%||$1.7 billion||80 cents per share||12|
|Intel||$11.7 billion||36%||-$2.8 billion||13 cents per share||39|
Semiconductor stocks: CPU vs GPU stocks in play?
According to experts, there has been a strong shift in demand towards companies making or supporting the design of graphical processing units as it supports the development of AI much more smoothly than CPUs.
This factor is clearly shown in the share price of these companies. Nvidia is the market leader in graphical processing units; its share price has jumped 166% so far this year, while Intel, the leader in CPUs, has gained only 10% since January this year.
Semiconductor stocks: Historical share price performance
|Company||1-Year Returns||5-Year Returns|
(Data as on June 1, 2023)
Semiconductor shares: Analyst Views
- Wedbush Securities has an ‘outperform’ rating on Nvidia with a share price target of $490.
- HSBC has a ‘buy’ rating on Nvidia with a share price target of $600.
- Raymond James has a ‘buy’ rating on AMD with a share price target of $110.
- Susquehanna has a ‘neutral’ rating on Intel with a share price target of $33.
- BNP Paribas has an ‘outperform’ rating on Broadcom with a share price target of $690.
- Wells Fargo has an ‘overweight’ rating on Marvell Technologies with a share price target of $65.
This is not investment advice. Investments in the securities market are subject to market risk, read all the related documents carefully before investing. Past performance is not indicative of future returns.