Top semiconductor stocks to watch in August: NVDA, AVGO, TXN, AMD, INTC

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Top semiconductor stocks to watch in August: NVDA, AVGO, TXN, AMD, INTC

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 Top semiconductor stocks to watch in August: NVDA, AVGO, TXN, AMD, INTC
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Highlights:

  • NVIDIA Corporation (NASDAQ: NVDA) reported preliminary gaming revenue of US$2.04 billion in Q2 FY23.
  • Broadcom Inc. (NASDAQ: AVGO) returned gains of over 12 per cent YoY.
  • Texas Instruments Incorporated (NASDAQ: TXN) stock touched a 52-week low on August 5, 2022.

The semiconductor sector comprises some of the leading technology companies. NVIDIA Corporation (NASDAQ: NVDA), Broadcom Inc. (NASDAQ: AVGO), Texas Instruments Incorporated (NASDAQ: TXN), Advanced Micro Devices, Inc. (NASDAQ: AMD), and Intel Corporation (NASDAQ: INTC), are some of the major companies in the semiconductor industry.

The demand for semiconductors has witnessed an upsurge recently. Meanwhile, most of the sectors, ranging from technology to the automotive industry, now needs semiconductor chips for their businesses.

However, the pace of the overall technology sector in 2021 has largely been subdued due to several macroeconomic factors. The decades-high inflation coupled with the Fed's aggressive tightening of its monetary policy had an impact on the overall market. In addition, the economy also seems to have cooled in recent months, raising concerns over a potential recession

According to government data, the US economy shrank for the first two quarters of the year. In the second quarter, US GDP fell 0.9 per cent in Q2 2022 after slipping 1.6 per cent in the first quarter.

After Covid-19 disrupted the global supply chain, followed by increasing demand for semiconductors, the sector is witnessing a major supply crunch.

Let's take a look at the stock performance of the semiconductor companies with Kalkine Media® along with their financial performances.

NVIDIA Corporation (NASDAQ: NVDA)

NVIDIA is a leading semiconductor firm that had a current yield of 0.08 per cent. The US$ 448.42 billion company had an annualized dividend of US$ 0.16.

In the preliminary financial results for the second quarter of fiscal 2023, the Santa Clara, California-based firm posted a revenue of US$ 6.70 billion, less than its guidance of US$ 8.10 billion. The company said that due to "weaker Gaming revenue", its revenue fell short of expectations.

According to the preliminary report, the firm's gaming revenue was US$ 2.04 billion in Q2 FY23, representing a slump of 44 per cent and 33 per cent from the same quarter of the prior year. Its management is expected to deliberate on its financial results for the second quarter of fiscal 2023 later this month on August 24. It would also discuss its guidance on the same date.

Its preliminary revenue dropped by 19 per cent, but on a year-over-year (YoY) basis, it grew three per cent.

Following the preliminary results, the price of the NVDA stock fell 6.50 per cent to trade at US$ 177.55 at 10:46 am ET on August 8.

Broadcom Inc. (NASDAQ: AVGO)

The semiconductor manufacturing firm, Broadcom Inc. had a current yield of 2.97 per cent and its annualized dividend is US$ 16.40. The US$ 221.20 billion market cap company is expected to announce its third quarter of fiscal 2022 financial results on September 1, after the closing bell of the market.

Meanwhile, in the second quarter of fiscal 2022, Broadcom posted a 23 per cent jump in its revenue of US$ 8.10 billion. On a Generally Accepted Accounting Principles (GAAP) basis, its net income was US$ 2.59 billion, or US$ 5.93 per diluted share in the fiscal 2022 second quarter, noting a significant increase from US$ 1.49 billion, or US$ 3.30 per diluted share in Q2 FY21.

While AVGO stock has given its investors returns of 12 per cent on an annual basis, its year-to-date (YTD) performance has suffered as it slumped over 18 per cent. 

At its current trading price, it traded about 17 per cent above its 52-week low of US$ 462.66 noted on August 19, 2021.

Texas Instruments Incorporated (NASDAQ: TXN)

The semiconductor designer and manufacturer, Texas Instruments, has a market cap of US$ 168.70 billion. Its current yield is 2.5 per cent, and its annualized dividend is US$ 4.60, respectively.

TXN stock noted a 52-week low of US$ 144.4589 on July 5, 2022, and a 52-week high of US$ 202.26 on October 25, 2021. At its current trading price, it traded about 26 per cent up from its 52-week low. 

The stock of the Dallas, Texas-based firm came under pressure this year, as evidenced by the fall in its price. TXN lost over five per cent YoY while declining 2.80 per cent YTD.

Texas Instruments posted a 14 per cent YoY growth in its fiscal 2022 second-quarter revenue of US$ 5.21 billion. Its net income soared 19 per cent YoY to US$ 2.29 billion, and its earnings per share (EPS) grew at 20 per cent annually to US$ 2.45 apiece in Q2 FY22.

Its board of directors announced a quarterly cash dividend of US$ 1.15 per share on its common stock on July 21. The dividend would be payable on August 16, 2022, the company said.

Top semiconductor stocks: NVDA, AVGO, TXN, AMD, INTCSource: ©Kalkine Media®; © Canva via Canva.com

Advanced Micro Devices, Inc. (NASDAQ: AMD)

Advanced Micro Devices is another leading chipmaker with a market cap of over US$ 160.99 billion. AMD stock grew over 30 per cent in the ongoing quarter, but it has lost nearly 31 per cent on YTD basis and nine per cent on an annual basis.

The Santa Clara, California-based firm posted a revenue of US$ 6.55 billion in Q2 FY22, up 70 per cent YoY. Its net income decreased by 37 per cent YoY to US$ 447 million in Q2 FY22.

In the second quarter of fiscal 2022, Advanced Micro Devices registered a 53 per cent slump in its earnings per share (EPS) of US$ 0.27.

Intel Corporation (NASDAQ: INTC)

The INTC stock witnessed choppy trading this year amid a slew of uncertainties in the market. INTC stock slumped over 34 per cent YoY while falling about 31 per cent this year. It touched a 52-week low of US$ 35.18 on August 5, 2022.

According to Refinitiv, Intel had a Relative Strength Index or RSI of about 37. Some analysts believe that a stock having RSI between 30 and 50 indicates that it could be highly volatile now.

The chipmaker announced a quarterly cash dividend of US$ 0.365 per share or US$ 1.46 per share on an annual basis on its common stock on July 14, 2022. The dividend would be payable on September 1, 2022, the company said.

Intel's revenue plummeted 22 per cent YoY to US$ 15.3 billion in Q2 FY22. It posted a net loss of US$ 454 million in Q2 FY22, against an income of US$ 5.06 billion.

The Santa Clara, California-based firm said that it now expects its revenue to be between US$ 15 billion and US$ 16 billion in Q3 FY22. For fiscal 2022, Intel expects its revenue to be anything between US$ 64 billion and US$ 68 billion. 

Bottom line:

The investors were highly hopeful about the semiconductor industry as the economy was recovering from the pandemic.  However, the industry still seems to be facing a supply crunch due to a flurry of uncertainties in the market. 

The Congress passed a US$ 280 billion CHIPS and Science Act on July 28. A total of US$ 52 billion would be spent on the domestic semiconductor fabrication plants and US$ 24 billion would be reserved for a 25 percent tax credit on the new production plants through the next four years. Furthermore, about US$ 200 billion would be assigned for research purposes.

The Dow Jones US Semiconductor Index fell more than 23 per cent this year. On a QTD basis, it gained over 20 per cent.

However, given the highly volatile condition of the market, investors should closely evaluate the risks associated with the equity market.

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