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Tag: Semiconductor

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Cloud Service Providers Industry Semiconductors Stocks Technology

Marvell’s Investment Case Got Stronger With Hyperscaler Capex

Marvell Custom Silicon

Marvell Technology (MRVL) $114

I missed buying this in the low 90s, waiting to see if their transformation to an AI chip company was complete. Having a cyclical past, with non-performing business segments made me hesitate, besides far too many promises have been made in the AI space only for investors to be disappointed.

Marvel has been walking the talk, Q3 results in Dec 2024 were exemplary, and guidance even better.

Hyperscaler demand

With a planned Capex of $105Bn for 2025, Amazon confirmed on their earnings call that the focus will continue on custom silicon and inferencing. Amazon and Marvell have a five-year, “multi-generational” agreement for Marvell to provide Amazon Web Services with the Trainium and Inferentia chips and other data center equipment. Since the deal is “multi-generational,” Marvell will continue to supply the released Trainium2 5nm (Trn2) while also supplying the newly-announced Trainium3 (Trn3) on the 3nm process node expected to ship at the end of 2025. Amazon is an investor in Anthropic with plans to build a supercomputing system with “hundreds of thousands” of Trainium2 chips called Project Rainier. The DeepSeek aftermath does suggest a further democratization of AI, as inference starts gaining prominence from 2026.

Critically, like other hyperscalers Microsoft, Meta, and Alphabet, Amazon announced a high Capex (Capital Expenditure) plan of $105Bn for 2025, 27% higher than 2024, which itself was 57% higher than the previous year, for AI cloud and datacenter buildout. It was the last of the big four to confirm that massive AI spending was very much on the cards for 2025.

Here’s the scorecard for 2025 Capex, totaling over $320Bn. A few months back, estimates were swirling for $250 to $275. Goldman had circulated $300Bn in total Capex for the year, and these four have already planned more.

Amazon $105Bn
Microsoft $80Bn
Alphabet $75Bn
Meta $60 to $65Bn
Total $320Bn

The earnings call discussed DeepSeek R1 and the lower AI cost structure that it may presage, with the possibility of lower revenue for AI cloud services.

“We have never seen that to be the case,” Amazon CEO Andy Jassy said on the call. “What happens is companies will spend a lot less per unit of infrastructure, and that is very, very useful for their businesses. But then they get excited about what else they could build that they always thought was cost prohibitive before, and they usually end up spending a lot more in total on technology once you make the per unit cost less.”
Amazon plans to spend heavily on custom silicon and focus on inference as well besides buying Blackwells by the truckload.

Q3-FY2025

Marvell reported impressive Q3 results that beat revenue estimates by 4% and adjusted EPS estimates by 5.5%, led by strong AI demand. FQ3 revenue accelerated to 6.9% YoY and 19.1% QoQ growth to $1.52 billion, helped by a stronger-than-expected ramp of the AI custom silicon business.

For the next quarter, management expects revenue to grow to 26.2% YoY and 18.7% QoQ to $1.8 billion at the midpoint. The Q4 guide beats revenue estimates by 9.1% and adjusted EPS estimates by 13.5%. Management expects to significantly exceed the full-year AI revenue target of $1.5 billion and indicated that it could easily beat the FY2026 AI revenue target of $2.5 billion.

Marvell has other segments, which account for 27% of the business that are not performing as well, but they’re going full steam ahead to focus on the custom silicon business and expect total data center to exceed 73% of revenue in the future.

  • Adjusted operating margin – 29.7% V 29.8% last year, and better than the management guide of 28.9%.
  • Management guidance for Q4 is even higher at 33%.
  • Adjusted net income – $373 Mn or 24.6% of revenue compared to $354.1 Mn or 25% of revenue last year.
  • Management has also committed to GAAP profitability in Q4, and continued improvements.

Custom Silicon – There are estimates of a TAM (Total Addressable Market) of $42 billion for custom silicon by CY2028, of which Marvell could take 20% market share or $8Bn of the custom silicon AI opportunity, I suspect we will see a new forecast when the company can more openly talk about an official announcement. On the networking side, the TAM is another $31 billion.

“Oppenheimer analyst Rick Schafer thinks that each of Marvell’s four custom chips could achieve $1 billion in sales next year. Production is already ramping up on the Trainium chip for Amazon, along with the Axion chip for the Google unit of Alphabet. Another Amazon chip, the Inferentia, should start production in 2025. Toward the end of next year, deliveries will begin on Microsoft’s Maia-2, which Schafer hopes will achieve the largest sales of all.”

Key weaknesses and challenges

Marvell carries $4Bn in legacy debt, which will weigh on its valuation.

The stock is already up 70% in the past year, and is volatile – it dropped $26 from $126 after the DeepSeek and tariffs scare.

Custom silicon, ASICs (Application Specific Integrated Circuits) have strong competition from the likes of Broadcom and everyone is chasing market leader Nvidia. Custom silicon as the name suggests is not widely used like an Nvidia GPU and will encounter more difficult sales cycles and buying programs.

Drops in AI buying from data center giants will hurt Marvell.

Over 50% of Marvell’s revenue comes from China, and it could become a victim of a trade war.

Valuation: The stock is selling for a P/E of 43, with earnings growth of 80% in FY2025 and 30% after that for the next two years – that is reasonable. It has a P/S ratio of 12.6, with growth of 25%. It’s a bit expensive on the sales metric, but with AI taking an even larger share of the revenue pie, this multiple could increase.

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AI Cloud Service Providers Industry Semiconductors Stocks

DeepSeek Hasn’t Deep-Sixed Nvidia

01/28/2025

Here is my understanding of the DeepSeek breakthrough and its repercussions on the AI ecosystem

DeepSeek used “Time scaling” effectively, which allows their r1 model to think deeper at the inference phase. By using more power instead of coming up with the answer immediately, the model will take longer to research for a better solution and then answer the query, better than existing models.

How did the model get to that level of efficiency?

DeepSeek used a lot of interesting and effective techniques to make better use of its resources, and this article from NextPlatform does an excellent job with the details.

Besides effective time scaling the model distilled the answers from other models including ChatGPT’s models.

What does that mean for the future of AGI, AI, ASI, and so on?

Time scaling will be adopted more frequently, and tech leaders across Silicon Valley are responding to improve their methods as cost-effectively as possible. That is the logical and sequential next step – for AI to be any good, it was always superior inference that was going to be the differentiator and value addition.

Time scaling can be done at the edge as the software gets smarter.

If the software gets smarter, will it require more GPUs?

I think the GPU requirements will not diminish because you need GPUs for training and time scaling, smarter software will still need to distill data. 

Cheaper LLMs are not a plug-and-play replacement. They will still require significant investment and expertise to train and create an effective inference model. Just as a number aiming at a 10x reduction in cost is a good target but it will compromise quality and performance. Eventually, the lower-tier market will get crowded and commoditized – democratized if you will, which may require cheaper versions of hardware and architecture from AI chip designers, as an opportunity to serve lower-tier customers.

Inferencing

Over time, yes inference will become more important – Nvidia has been talking about the scaling law, which diminishes the role of training and the need to get smarter inference for a long time. They are working on this as well, I even suspect that the $3,000 Digits they showcased for edge computing will provide some of the power needed.

Reducing variable costs per token/query is huge: The variable cost will reduce, which is a huge boon to the AI industry, previously retrieving and answering tokens cost more than the entire monthly subscription to ChatGPT or Gemini.

From Gavin Baker on X on APIs and Costs:

R1 from DeepSeek seems to have done that, “r1 is cheaper and more efficient to inference than o1 (ChatGPT). r1 costs 93% less to *use* than o1 per each API, can be run locally on a high end work station and does not seem to have hit any rate limits which is wild.

However, “Batching massively lowers costs and more compute increases tokens/second so still advantages to inference in the cloud.”

It is comparable to o1 from a quality perspective although lags o3.

There were real algorithmic breakthroughs that led to it being dramatically more efficient both to train and inference.  

On training costs and real costs:

Training in FP8, MLA and multi-token prediction are significant.  It is easy to verify that the r1 training run only cost $6m.

The general consensus is that the “REAL” costs with the DeepSeek model much larger than the $6Mn given for the r1 training run.

Omitted are:

Hundreds of millions of dollars on prior research and has access to much larger clusters.

Deepseek likely had more than 2048 H800s;  An equivalently smart team can’t just spin up a 2000 GPU cluster and train r1 from scratch with $6m.  

There was a lot of distillation – i.e. it is unlikely they could have trained this without unhindered access to GPT-4o and o1, which is ironical because you’re banning the GPU’s but giving access to distill leading edge American models….Why buy the cow when you can get the milk for free?

The NextPlatform too expressed doubts about DeepSeek’s resources

We are very skeptical that the V3 model was trained from scratch on such a small cluster.

A schedule of geographical revenues for Nvidia’s Q3-FY2025 showed 15% of Nvidia’s or over $4Bn revenue “sold” to Singapore, with the caveat that it may not be the ultimate destination, which also creates doubts that DeepSeek may have gotten access to Nvidia’s higher-end GPUs despite the US export ban or stockpiled them before the ban. 

Better software and inference is the way of the future

As one of the AI vendors at CES told me, she had the algorithms to answer customer questions and provide analytical insides at the edge for several customers – they have the data from their customers and the software, but they couldn’t scale because AWS was charging them too much for cloud GPU usage when they didn’t need that much power. So besides r1’s breakthrough in AGI, this movement has been afoot for a while, and this will spur investment and innovation in inference. We will definitely continue to see demand for high-end Blackwell GPUs to train data and create better models for at least the next 18 months to 24 months after which the focus should shift to inference and as Nvidia’s CEO said, 40% of their GPUs are already being used for inference.

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AI Semiconductors Stocks

Micron’s Low Price Is A Gift

Micron’s data center revenue should grow 91% and 38% in FY2025 and FY2026, driven by cloud server DRAM and HBM.

The market is not assigning a strong multiple to Micron’s largest, most profitable, and fastest-growing segment, with HBM3E contributing significantly, and future growth expected from HBM4.

Micron should gain from an extremely strong AI market as evidenced by huge CAPEX from hyperscalers, Nvidia’s Blackwell growth, and Taiwan Semiconductors’s forecasts.

Consumer NAND business faced challenges due to inventory reductions, seasonal slowdowns, and delayed PC refresh cycles, impacting Q2 revenue guidance and margins.

Despite short-term consumer weakness, Micron’s strong data center prospects and attractive valuation make it a compelling buy, especially at the current price of $90

You can read the entire article on Seeking Alpha; Micron (MU) dropped a massive 15% after DeepSeek deep-sixed the market. Nvidia (NVDA) too dropped 14%, but has begun to recover and I expect Micron to recover as well.

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AI Semiconductors Stocks

Taiwan Semiconductor  Manufacturing (TSM)  Hits It Out Of The Park

What a great start to the earnings season! 

TSM is up 5% premarket after a massive beat and terrific guidance for AI demand.

TSM, the indispensable chip producer and source for some of the world’s largest tech companies, including Apple (AAPL), Nvidia (NVDA), AMD (AMD), and other chipmakers produced outstanding results this morning.

Q4 Metrics

Sales up 37% YoY to $26.88B

Earnings per American Depositary Receipt $2.24, up 69% YoY compared to $1.44 

Both top and bottom line numbers surpassed analysts’ expectations.

“Our business in the fourth quarter was supported by strong demand for our industry-leading 3nm and 5nm technologies,” said Wendell Huang, senior VP and CFO of TSM in the earnings press release.

Strong AI momentum

TSMC’s brilliant Q4 results beat management’s guidance, and confirmed the strong AI momentum for 2025, disproving any notions about reduced or waning demand. With $300Bn in planned Capex by just the hyperscalers, I believe investors’ concerns are misplaced.

Management highlighted TSM’s growing collaborations with the memory industry during the earnings call, reinforcing confidence in strong and accelerated HBM demand, which bodes well for HBM makers like Micron (MU).

Closer interaction with HBM makers also suggests a strong foundation for the potential ramp of TSM’s 3nm node and upcoming 2nm node, which would be essential for AI development.

TSM has de-risked geo-political issues with its overseas factories in Arizona and Kumamoto. It also noted that it could manage further export controls from the US government to China, besides only 11% of their sales were to China.

“Let me assure you that we have a very frank and open communication with the current government and with the future one also,” said Wei when asked about the current and next U.S. administrations.

Any de-risking is a tailwind for increasing multiples and valuation for the stock. I had recommended TSM earlier stating that the geo-political concerns shouldn’t devalue the crown jewel of the semiconductor industry.

Q4 Revenue by Technology

TSM said 3nm process technology contributed 26% of total wafer revenue in the fourth quarter, versus 15% in the year-ago period, and 20% in the third quarter of 2024.

The 5nm process technology accounted for 34% of total wafer revenue, compared to 35% in the same period a year ago, and 32% in the third quarter of 2024. Meanwhile, 7nm accounted for 14% of total wafer revenue in the fourth quarter versus 17% a year earlier, and in the third quarter of 2024.

Total 3nm+5nm = 26+34 = 60% – that’s a fantastic high-margin business.

Advanced technologies (7nm and below) accounted for 74% of wafer revenue.

Q4 Revenue by Platform

High Performance Computing represented 53% of net revenue, up from 43% in the fourth quarter of 2023. – Nvidia, AMD, Broadcom.

The company’s smartphone segment represented 35% of net revenue, versus 43% in the year-ago period. – Apple

Q4 Revenue by Geography

Revenue from China — Taiwan Semi’s second-biggest market by revenue — accounted for 9% of the total net revenue in the period, down from 11% in the year-ago period and in the third quarter of 2024.

North America accounted for 75% of total net revenue coming from it, compared to 72% a year earlier, and 71% in the third quarter of 2024.

Outlook

“Moving into the first quarter of 2025, we expect our business to be impacted by smartphone seasonality, partially offset by continued growth in AI-related demand,” said Huang.

TSM expects capital expenditure to be between $38B to $42B in 2025. The amount is up to 19% more than analysts’ expectations, according to a Bloomberg report.

In the first quarter of 2025, TSM expects revenue to be between $25B and $25.8B (midpoint at $25.4B), consensus of $24.75B. That’s a raise.

Categories
Semiconductors Stocks

The Knee Jerk Reaction To Micron’s Q1-25 Is A Gift

Micron Technology’s fiscal Q1-2025 earnings report offered two stories: a dramatic surge in data center revenue and a troubling outlook for its consumer-facing NAND business. Despite the strong performance in high-growth areas like AI and data centers, the company’s stock took a sharp dip after hours due to concerns about consumer weakness, especially in the NAND segment.

I’ve owned and recommended Micron for a while now, and even took some profits in June 2024 at $157, when it rose far above what I felt was its intrinsic value. Since it’s a cyclical stock in a commodity cyclical memory semiconductor business, getting a good price is unusually important, and it is crucial to take profits when the stock gets ahead of itself.

Micron’s (MU) stock slumped from $108 on weak guidance for the next quarter, and now at $89, it looks very attractive at this price. I’ve started buying again.

Record-breaking data center performance

Micron reported impressive growth in its Compute and Networking Business Unit (CNBU), which saw a 46% quarter-over-quarter (QoQ) and 153% year-over-year (YoY) revenue jump, reaching a record $4.4Bn. This success was largely driven by cloud server DRAM demand and a surge in high-bandwidth memory (HBM) revenue. In fact, data center revenue accounted for over 50% of Micron’s Q1-FY2025 total revenue of $8.7Bn, a milestone for the company.

HBM Revenue was a standout, with analysts estimating that the company generated $800 to $900Mn in revenue from this segment during the quarter. Micron’s HBM3E memory, which is used in products like Nvidia’s B200 and GB200 GPUs, has been a significant contributor to the company’s data center growth. Micron’s management also raised their total addressable market (TAM) forecast for HBM in 2025, increasing it from $25 billion to $30 billion—a strong indicator of the company’s growing confidence in its AI and server business.

Looking ahead, Micron remains optimistic about the long-term prospects of HBM4, with the expectation of substantial growth in the coming years. The company anticipates that HBM4 will be ready for volume production by 2026, offering 50% more performance than its predecessor, HBM3E, and potentially reaching a $100 billion TAM by 2030.

Consumer weakness and NAND woes

While Micron’s data center performance was strong, the company’s consumer-facing NAND business painted a less rosy picture. Micron forecasted a near 10% sequential decline in Q2 revenue, to $7.9Bn far below the consensus estimate of $8.97 billion, setting a negative tone for the future. This decline was primarily attributed to inventory reductions in the consumer market, a seasonal slowdown, and a delay in the expected PC refresh cycle – a segment that has also derailed other semis such as Advanced Micro Devices (AMD), and Lam Research (LRCX) among others. While NAND bit shipments grew by 83% YoY, a weak demand environment for consumer electronics—especially in the PC and smartphone markets—weighed heavily on performance.

Micron’s CEO, Sanjay Mehrotra, emphasized that the consumer market weakness was temporary and that the company expected to see improvements by early 2025. The company also noted the challenges posed by excess NAND inventory at customers, especially in the smartphone and consumer electronics markets. In particular, Micron’s NAND SSD sales to the data center sector moderated, leading to further concerns about demand sustainability. The slowdown in the consumer space and the underloading of NAND production is expected to continue into Q3, with Micron’s management projecting lower margins for the foreseeable future due to these supply-demand imbalances.

Micron reported Q1 revenue of $8.71 billion, up 84.3% YoY, and in line with consensus estimates. However, the company’s Q2 guidance of $7.9Bn (a 9.3% sequential decline) was notably weaker than the $8.97Bn analysts had expected. The guidance miss sent Micron’s stock down significantly in after-hours trading.

Financial highlights: Strong margins and profitability, but challenges ahead

Improving Margins: Micron’s gross margin for Q1 came in at 38.4%, an improvement of 3.1 percentage points QoQ, largely driven by the strength of HBM and data center DRAM. However, the outlook for Q2 is less optimistic, with gross margins expected to decline by about 1 percentage point due to continued weakness in NAND, along with seasonal factors and underloading impacts.

Micron’s operating margin for the quarter was 25.0%, ahead of guidance, reflecting the company’s tight cost control and strong performance in high-margin segments like HBM. However, for Q2, Micron expects operating margins to contract, with GAAP operating margin expected to drop to 21.8%.

Profitability also improved significantly with GAAP net income rising 111% QoQ to $1.87Bn, resulting in a GAAP EPS of $1.67, compared to a loss of $1.10 in the year-ago quarter. However, Micron guided for a significant drop in EPS for Q2, forecasting GAAP EPS of $1.26, well below the $1.96 expected by analysts.

Cash flow and capital investments

Micron’s cash flow generation remained robust, with operating cash flow (OCF) increasing by 130% YoY to $3.24 billion, but free cash flow (FCF) was more limited due to significant capital expenditures (CapEx) of $3.1 billion. The company also outlined its intention to spend around $14 billion in CapEx in FY25, primarily to support the growth of HBM and other high-margin data center products. In my opinion, this is a necessity to stay close to SK Hynix and Samsung, its biggest rivals in HBM, who also have a large chunk of the market and can easily match Micron in product improvements necessary to supply to the likes of Nvidia (NVDA). High Capex also increases its ability to scale and improve margins down the road, leading to greater cash generation.

Going home: Micron also announced a $6.1 billion award from the U.S. Department of Commerce under the CHIPS and Science Act to support advanced DRAM manufacturing in Idaho and New York. This partnership aligns with Micron’s long-term growth strategy in the data center and AI segments.

Micron is a bargain

I’m buying the stock with the risk that it could stay range-bound for a few months.

The company’s earnings call reflected a clear divergence in the outlook for its two key segments: data center and consumer electronics. Management sounded confident about data center growth, driven by strong demand for AI-driven applications while providing a more cautious forecast for the consumer NAND business, where inventory corrections and weakened demand are expected to persist through Q2 2024.

I’m very confident about Micron’s continued strength in the data center market, driven by AI and cloud computing, and believe that the prolonged weakness in consumer-facing NAND and PC markets in the short term is an opportunity to buy the stock at a bargain price. The market’s reaction suggests that investors were caught off guard by the unexpected weakness in the consumer business, but this has been persisting as I mentioned earlier with AMD, and Lam Research, and even before

earnings at $109, Micron was a lot below its 52-week high of $158. The further knee-jerk reaction is a boon for the bargain hunter.

For now, I’m not worried if the stock remains range bound – at $89, the downside is seriously limited and its future success will remain squarely on HBM data center demand. Its largest customer Nvidia is forecast to generate $200Bn worth of data center revenue from its Blackwell line and Micron will reap a good chunk of that.

Micron is priced at 13x FY Aug – 2025, with consensus analyst earnings of $6.93, which is forecast to grow to $11.53 in FY2026, a whopping jump of 66%, bringing the P/E multiple down to just 8. Even for a cyclical that’s a low. Besides, Micron is also growing revenues at 28% next year on the back of a 40% increase in FY 2025, which took it soaring past its previous cyclical high of $31Bn in FY2022. With data center revenue contributing more than 50% of the total, Micron does deserve a better valuation.

Categories
AI Semiconductors Stocks

Broadcom Is A Strong AI Contender

ASICs

12/12/2024

Broadcom (AVGO) reported good results and exceeded guidance for Q1-FY2025

Revenue $14.05Bn for Q4-FY2024, up 51% YoY (It acquired VMWare) in line with expectations. Without the VMWare acquisition, organic revenue growth was 11%.

GAAP net income of $4.3Bn; Non-GAAP net income of $ 6.9Bn, slightly higher than estimated.

Adjusted EBITDA of $9.1Bn or 65 percent of revenue – Adjusted margins are high because of the non-cash adjustment of charges for the merger with VMWare.

GAAP diluted EPS of $0.90 for the fourth quarter; Non-GAAP diluted EPS of $1.42 for the fourth quarter – Slightly higher than estimates.

Solid Cash Generation: Cash from operations of $5.6Bn for the fourth quarter, less capital expenditures of $122Mn, resulted in $5.5Bn of free cash flow, or 39 percent of revenue.

First quarter fiscal year 2025 revenue guidance of approximately $14.6Bn, an increase of 22 percent from the prior year period – Slightly higher than estimates of $14.5Bn.

First quarter fiscal year 2025 Adjusted EBITDA guidance of approximately 66 percent of projected revenue.

Surging AI revenues: It exceeded its earlier projection of $11.5Bn AI revenues with $ 12.2Bn, mainly with sales of ASICs to Google, besides selling ethernet solutions to other AI data center clients.

“Broadcom’s fiscal year 2024 revenue grew 44% year-over-year to a record $51.6 billion, as infrastructure software revenue grew to $21.5 billion, on the successful integration of VMware,” said Hock Tan, President and CEO of Broadcom Inc. (AVGO) “Semiconductor revenue was a record $30.1 billion driven by AI revenue of $12.2 billion. AI revenue which grew 220 percent year-on-year was driven by our leading AI XPUs and Ethernet networking portfolio.“

Should the proposed development of semis for Apple go through as planned, they’d be an even stronger contender in AI data center infrastructure.

I own Broadcom and continue to accumulate and plan to hold for at least 3-5 years. The VMWare integration is also going according to plan and will be a source of sustainable and recurring revenue.

Categories
AI Semiconductors Stocks

Qualcomm, (QCOM) Solid Beat On Turbocharged Auto Sales

Post earnings the stock was up 9% to $188, yesterday, but has given up most of its gains, today. I’m continuing to accumulate.

I’ve owned Qualcomm for a while now, and recommended it in July 2024, and earlier in September 2023, when I wrote a lengthy article on the auto-tech industry. I believe in its long-term strengths and plan to keep the investment for the next three to five years.

Key Strengths include:

  • The Crown Jewel – Its licensing business with its treasure trove of patents generating 70% margins.
  • Strong growth from autos – one of the market leaders with Nvidia and Mobile Eye.
  • Its partnership with Microsoft (MSFT) for AI PCs

Sep Q-2024 Results

QCT sales rose 18% year-over-year to $8.678B.

Within QCT, Auto was the best performer – sales jumped 68% to $899M. This was the biggest surprise as Qualcomm’s auto sales growth cadence is in the mid-thirties. Auto sales tend to be lumpy so this was a really big positive.

Revenue from handsets rose 12% year-over-year to $6.096B. Handsets tend to struggle sometimes –  based on Apple’s fortunes and after drops in the previous year, this was a welcome return to growth.

Its IoT segment has been a slow grower – usually mid-single digits, but it grew 22% this quarter to $1.683Bn. 

Licensing revenue rose 21% year-over-year to $1.521B. Licensing is its most lucrative segment with gross margins over 70% – pretty much its crown jewel.

Q1FY2025 Guidance:

Revenue of $10.5B-$11.3B vs $10.61B consensus. At the midpoint, that’s an increase of 3% Non-GAAP diluted EPS of $2.85-$3.05 vs $2.87 consensus, which at the midpoint is also an increase of 3%. from handsets rose 12% year-over-year to $6.096B.

The CEO, Cristiano Anon, had this to say about the quarter

“We are pleased to conclude the fiscal year with strong results in the fourth quarter, delivering greater than 30% year-over-year growth in EPS,” “We are excited about our recent product announcements at Snapdragon Summit and Embedded World, as they continue to extend our technology leadership and position us well across Handsets, PC, Automotive and Industrial IoT. We look forward to providing an update on our growth and diversification initiatives at our Investor Day on November 19.”

Analysts from UBS and J.P. Morgan upped their price targets, while Barclays analyst Tom O’Malley (who kept his Overweight rating and $200 price target) pointed out that there is now a “bifurcation in Android between the high and low end” and Qualcomm is benefiting both in units and average selling price.

At $180, Qualcomm is very reasonably priced at 16x next year’s estimated earnings and 4x next year’s forecasted sales.

Given its market leadership in auto-tech, AI PCs, and sustainable, and recurring high-margin licensing business, Qualcomm should be priced between 20-22x earnings. It spends a good 25% of its revenues on R&D, which will enable it to continue innovating and growing. Even after that, it still returned $1.6Bn to shareholders with $0.7Bn in share buybacks and $0.9Bn in dividends.

Categories
AI Industry Semiconductors

ASML (ASML) AT $690 Is A Bargain

ASML - Semiconductor Giant
ASML

Sure it could stay sluggish, range-bound, or fall till there’s some improvement in bookings, export controls to China, etc. Perhaps, that may not even happen for a while.
I think that’s an acceptable risk, now I’m getting a monopoly at a 37% drop from its 52-week high of $1,110, still growing revenue at 12% and EPS at 22%, selling for 8x sales and 25x earnings.
With TSM’s results, we saw how strong AI semiconductor demand still is and there was absolutely no let-up in their guidance.

A monopoly for AI chip production – an essential cog, without which AI is not possible – is definitely worth the risk

Categories
Stocks

Qualcomm

Qualcomm (QCOM) $175 

Hold, waiting for a better price to add. Long Term story remains good.

Similar to Lam, there were a couple of weaknesses that erased yesterdays post market gains and then some.

Conservative commentary about the smartphone market for the rest of the year.

Lost its position in Huawei phones, it faces some challenges in the second half of CY24 as the Huawei loss will weigh on handset revenues.

Not enough visibility on AI PC’s revenue – there are 20 models launched, which may be positive surprise.

Management is conservative, which is a good thing.