For immediate release
Chicago, IL – August 11, 2022 – Zacks.com announces the list of stocks featured in the analyst blog. Every day, Zacks Equity Research analysts discuss the latest news and events impacting stocks and financial markets. Stocks recently featured in the blog include: NVIDIA NVDA, Micron MU, Taiwan Semiconductor Company TSM, Advanced Micro Devices AMD, and Texas Instruments TXN.
Here are highlights from Thursday’s analyst blog:
Semiconductor stocks plunge: buy, sell or hold?
This week has been really bad for semiconductor stocks, as the first NVIDIA so what Micron announced that they were cutting their outlook.
NVIDIA attributed its failure to project (and it was a huge 17.3% failure) to weakness in the gaming sector, which it said was due to declining sales at gaming partners. distribution affected by macroeconomic concerns. Worse still, CEO Jenseng Huang warned, “As we expect macroeconomic conditions affecting the sale to continue, we have taken action with our gaming partners to adjust pricing and channel inventory.”
This then boils down to a slowdown in demand for discretionary items, as well as devices (PCs, smartphones, gaming devices, etc.). It could be the first, because some of that spending has been diverted to services and the “open” economy, especially because people have been buying a lot in the last 1-2 years and not having need more devices at the moment. And two, because there really is a problem called inflation that, despite all the stimulus money, is starting to hurt some customers.
This slowdown in demand could be a signal that the economy is going where the Fed predicted. Only, when it comes to these fabless semiconductor companies, they are seeing increased costs due to supply chain issues and the Taiwan-China-US tension is not helping matters at all.
On the contrary, there is a lot of concern about the future of chip supply given Taiwan’s leading position there. Taiwan Semiconductor Company sees more demand than it can meet and, as a manufacturer, is able to continue to raise prices. Its customers, like NVIDIA, are in a hurry (given the lack of more than 20 bps on the gross margin).
It’s not too much of a stretch to think that crypto softness affects NVIDIA as well, because it’sAdvanced micro-systems. And like AMD, Nvidia says supply chain issues are causing the data center to grow weaker than expected, but it still continues to grow very strongly.
Micron followed NVIDIA shortly after with its own announcement that macroeconomic conditions had deteriorated significantly, causing demand for its DRAM and NAND memory chips to slow since its June 30 call. the next two quarters. Capex is also reduced accordingly.
Predictably, the entire segment has been in the red since then, with chipmakers like AMD, NVDA, QCOM, MU, TSM, AMAT, INTC all selling out.
As is likely apparent from the discussion above, the semiconductor segment is not a good place to invest your money right now. In the case of companies like NVIDIA, Qualcomm, Micron, and AMD, you’ll likely find a better entry point because things seem to head down before going up. Intel is in a long-term stalemate and not recommended anytime in the near future. Therefore, selling Micron, AMD, and NVDA instead seems like a good plan.
There are a few actions that stand out though.
TSM is the one that benefits from being a low-cost manufacturer and despite all the fabless players desperate to diversify their supply chains, these things take time. So in the meantime, TSM is the only hope for many, especially given his prowess at the point.
Another stock that is generally a good defensive play isTexas Instruments. The fact that it has its own factories and relatively low exposure to Asian manufacturing is an added advantage.
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Texas Instruments Incorporated (TXN): Free Stock Analysis Report
Advanced Micro Devices, Inc. (AMD): Free Inventory Analysis Report
Micron Technology, Inc. (MU): Free Stock Analysis Report
NVIDIA Corporation (NVDA): Free Stock Analysis Report
Taiwan Semiconductor Manufacturing Company Ltd. (TSM): free inventory analysis report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.