The semiconductor industry is influenced by the cyclical demand for advanced electronic products such as smartphones, PCs, servers, and data storage solutions. While analog chips serve as the foundational elements of most electronic devices, processors (CPUs) and graphics chips act as their central brains. Emerging technologies like artificial intelligence, 5G, the Internet of Things, and smart vehicles are driving the next wave of growth in the industry.
Q2 Earnings Summary
The 41 semiconductor stocks we track reported mixed results for Q2. Collectively, revenues exceeded analysts’ consensus estimates by 1.3%, but the revenue guidance for the next quarter was 4.4% below expectations. Growth stocks, particularly those with future cash flows, had a strong end to 2023. However, 2024 has brought increased market volatility due to fluctuating inflation data, leading to a 6.6% average decline in semiconductor stock prices since the latest earnings reports.
Western Digital (NASDAQ: WDC)
Western Digital, founded in 1970 by a former Motorola employee, is a leading producer of hard disk drives, SSDs, and flash memory. The company reported Q2 revenues of $3.76 billion, marking a 40.9% year-on-year increase. This performance met analysts’ expectations and demonstrated significant improvements in gross margin and earnings per share (EPS).
David Goeckeler, CEO of Western Digital, commented, “Our fourth quarter and fiscal year 2024 results reflect the diverse and innovative portfolio aligned with our strategic roadmap. We are benefiting from a broad recovery across our end markets and are improving through-cycle profitability for both Flash and HDD.”
Despite these strong results, Western Digital’s stock has decreased by 5.6% since the earnings announcement, trading at $63.29.
Best Q2 Performer: Himax (NASDAQ: HIMX)
Himax Technologies, based in Taiwan, specializes in display driver chips and timing controllers used in various electronic devices. The company reported Q2 revenues of $239.6 million, a 2% increase year-on-year, outperforming analysts’ expectations by 2.9%. Himax also showed a notable improvement in its gross margin.
However, despite the strong performance, Himax’s stock has fallen by 8.5% since the earnings release and is currently trading at $5.36.
Weakest Q2 Performer: Lattice Semiconductor (NASDAQ: LSCC)
Lattice Semiconductor is a leading designer of customer-programmable chips that enhance CPU performance for tasks like machine learning. The company reported a 34.7% year-on-year decline in revenues, totaling $124.1 million, and missed analysts’ expectations by 4.7%. The quarter was marked by disappointing revenue guidance and a decline in operating margin.
Lattice Semiconductor’s stock has dropped by 22.7% since the earnings announcement, trading at $42.45.
Other Notable Performers
Lam Research (NASDAQ: LRCX)
Founded by David Lam in 1980, Lam Research is a key provider of wafer fabrication equipment for semiconductors. The company reported revenues of $3.87 billion, up 20.7% year-on-year, surpassing analysts’ expectations by 1%. Lam Research also showed impressive EPS results and an improvement in operating margin. Despite this, the stock has decreased by 16.6% since the report, currently trading at $770.13.
Broadcom (NASDAQ: AVGO)
Broadcom, originally part of Hewlett Packard, is a semiconductor conglomerate with diverse markets including wireless, networking, data storage, and industrial applications. The company reported revenues of $13.07 billion, a 47.3% increase year-on-year, which was in line with analysts’ expectations. However, Broadcom’s revenue guidance for the next quarter fell short of expectations. The stock has risen by 3.7% since the earnings report, trading at $158.68.
Conclusion
The Q2 earnings results for semiconductor companies reveal a varied landscape of performance. While some companies like Western Digital and Himax have demonstrated strong results, others like Lattice Semiconductor have faced significant challenges. The industry’s cyclical nature and evolving market conditions continue to impact stock performance, highlighting the need for careful analysis and strategic investment decisions.
Related Topics:
