With a $129.17 billion market cap, Intel Corporation (INTC) is a global semiconductor company engaged in designing and manufacturing products and technologies. The company delivered a disappointing financial performance in its last quarter. INTC’s revenue decreased 22% year-over-year to $15.32 billion. The company also reported an operating loss and a net loss of $0.7 billion and $0.45 billion, respectively
Furthermore, analysts expect INTC’s revenue and EPS for the fiscal year 2022 to decline 11.4% and 46.4% year-over-year to $66.21 billion and $2.61, respectively. Also, the stock plummeted 34% over the past six months and 41.1% over the past year to close the last trading session at $31.46.
Notwithstanding INTC’s poor performance and recent selloff due to chip manufacturers currently dealing with excess inventory, semiconductors are expected to be extensively and increasingly used in electronics, critical infrastructure, electric vehicles, and other industries, supported by a positive long-term demand outlook.
According to Vantage Market Research, the global semiconductor market is estimated to grow at a CAGR of 8.8% from 2022 to 2028. With legislative support from the CHIPS and Science Act, the U.S semiconductor industry seems well positioned to capitalize on this growth opportunity.
Hence, instead of INTC, we suggest considering fundamentally strong semiconductor stocks Broadcom Inc. (AVGO), Micron Technology, Inc. (MU), MaxLinear, Inc. (MXL), and Rambus, Inc. (RMBS) for your portfolio this fall for better returns.
Broadcom Inc. (AVGO)
AVGO develops and supplies various semiconductor devices worldwide. The company operates in two segments: Semiconductor Solutions; and Infrastructure Software.
AVGO’s offerings include set-top box system-on-chips (SoCs), ethernet switching and routing merchant silicon products, fiber optic transmitter and receiver components, internet protocol (IP) licensing, radio frequency (RF) semiconductor devices, custom touch controllers, and connectivity solutions.
On September 6, AVGO announced the delivery of its Trident 4C Ethernet switch ASIC, 12.8 terabits/second security switch. This product is capable of analyzing all traffic at line rate and detecting flow anomalies in real-time without the need to compromise between performance and security. The company expects the product to help its customers evolve their networks cost-effectively.
On August 22, AVGO and Tencent Holdings Ltd. (TCEHY) announced a strategic partnership to accelerate the adoption of high bandwidth co-packaged optics (CPO) network switches for cloud infrastructure. This collaboration is expected to help AVGO extend its market leadership.
For the fiscal 2022 third quarter ended July 31, 2022, AVGO’s net revenues increased 24.9% year-over-year to $8.46 billion. During the same period, the company’s non-GAAP operating income and non-GAAP EBITDA increased 31.8% and 30.4% year-over-year to $5.20 billion and $5.38 billion.
As a result, the non-GAAP net income for the quarter came in at $4.24 billion, up 35.8% from the previous-year quarter. Also, its quarterly EPS came in at $7.15, up 70.2% year-over-year.
For the fiscal year 2022, analysts expect AVGO’s revenue and EPS to increase 20.8% and 33.5% to $33.17 billion and $37.40, respectively. The company has surpassed consensus EPS estimates in each of the trailing five fiscals.
Over the past year, the stock has gained 5.9% to close the last trading session at $522.40.
AVGO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
AVGO also has an A grade for Quality and a B for Growth and Sentiment. In the B-rated Semiconductor & Wireless Chip industry, it is ranked #3 out of 94 stocks.
Click here for the additional POWR Ratings for Value, Momentum, and Stability for AVGO.
Micron Technology, Inc. (MU)
MU manufactures and sells memory and storage products internationally. The company operates through four segments: Compute and Networking Business Unit; Mobile Business Unit; Storage Business Unit; and Embedded Business Unit.
On September 1, MU declared its plans to build a new fabrication facility in Boise, Idaho, to produce cutting-edge memory, with an estimated $15 billion in investments. This is expected to secure the domestic supply of leading-edge memory required for market segments like automotive and data centers, fueled by the accelerating adoption of artificial intelligence and 5G.
Also, on August 9, MU announced an investment of $40 billion in leading-edge memory manufacturing in the United States. The company expects to begin production in the second half of the decade, ramping overall supply in line with industry demand trends. These capacity expansions are part of MU’s planned investments following the passage of the CHIPS and Science Act.
In the fiscal 2022 third quarter ended June 2, 2022, MU’s revenue increased 16.4% year-over-year to $8.64 billion. The company’s non-GAAP gross profit rose 28.6% year-over-year to $4.10 billion, while its non-GAAP operating income increased 33% from the prior-year value to $3.14 billion. Its non-GAAP net income came in at $2.94 billion, up 35.3% year-over-year.
Also, its non-GAAP EPS grew 37.8% year-over-year to $2.59.
Analysts expect MU’s EPS and revenue for the fiscal year 2022 (ended August 2022) to come in at $8.36 and $31.02 billion, indicating an improvement of 38% and 11.9% year-over-year, respectively. The company has an impressive earnings surprise history, as it has topped the consensus EPS estimates in each of the trailing five fiscals.
MU’s shares have gained 3.7% intraday to close the last trading session at $57.44.
MU’s strong fundamentals are reflected in its POWR Ratings. It has an overall B rating, equating to a Buy in our proprietary rating system. It has an A grade for Value and a B for Quality. It is ranked #28 among 94 stocks in the Semiconductor & Wireless Chip industry.
Beyond what is stated above, you can get Growth, Momentum, Sentiment, and Stability ratings for MU here.
MaxLinear, Inc. (MXL)
MXL provides radiofrequency, high-performance analog, and mixed-signal communications systems-on-chip solutions for the connected home, wired and wireless infrastructure, and industrial and multi-market applications worldwide. The company serves electronics distributors, original equipment manufacturers (OEMs), and original design manufacturers (ODMs).
On September 1, 2022, MXL announced that Digi International (DGII) selected MaxLinear PCIe bridges and serial transceivers for Integration into Digi Connect Console Access Servers. According to Research and Markets, this would help MXL corner a greater share of the growing data canter market, which is expected to reach revenues of over $69 billion by 2024.
On August 31, it was announced that Silicon Motion Technology Corporation (SIMO) shareholders approved the previously announced merger agreement under which MXL will acquire SIMO, subject to applicable terms and conditions.
MXL’s net revenue for the second quarter ended June 30 came in at $280.01 million, up 36.3% year-over-year. Its non-GAAP income from operations increased 86.4% year-over-year to $90.14 million. The company’s non-GAAP net income rose 114.8% from its year-ago value to $89.33 million. In addition, its non-GAAP EPS for the quarter came in at $1.11, up 109.4% year-over-year.
Analysts expect MXL’s revenue for the fiscal year 2022 to increase 24.4% from the previous year to $1.11 billion. Also, Street expects MXL’s EPS for the current year to grow 55% year-over-year to $4.17. The company has topped the consensus EPS estimates in each of the trailing four fiscals.
Over the past five days, the stock has gained 6.1% to close the last trading session at $37.89.
MXL has an overall B rating, equating to a Buy in our POWR Ratings system. It has an A grade for Growth and a B for Quality and Value. It is ranked #8 in the same industry.
We’ve also rated MXL for Momentum, Sentiment, and Stability. Get all the MXL ratings here.
Rambus, Inc. (RMBS)
RMBS provides semiconductor products in the United States, Taiwan, South Korea, Japan, Europe, Canada, Singapore, China, and internationally through direct sales and distributors. The company offers DDR memory interface chips, silicon IP, physical interface, and digital controller IP.
On July 18, RMBS announced the expansion of its DDR5 memory interface chip portfolio with the addition of the Rambus SPD (Serial Presence Detect) Hub and Temperature Sensor.
On May 24, RMBS completed the acquisition of Hardent, Inc., a leading SoC digital design company. Luc Seraphin, RMBS’ President, and CEO said, “Hardent’s advanced SoC design experience amplifies our CXL development efforts, and we are very pleased to welcome our new colleagues to the Rambus team.”
For the fiscal 2022 second quarter ended June 30, 2022, RMBS reported revenue of $121.13 million, up 42.7% year-over-year. The company’s operating income increased 152.2% over the previous-year quarter to $35.56 million. During the same period, its net income came in at $35.02 million, up 213.6% year-over-year. This translated to a quarterly EPS of $0.31, up 210% year-over-year.
Analysts expect RMBS’ revenue to increase 68.7% year-over-year to $553.84 million in the current year. Its EPS for the third quarter of fiscal 2022 is expected to increase 333.3% year-over-year to $0.13. Over the past year, the stock has gained 8.1% to close the last trading session at $25.54.
RMBS stable outlook has earned it an overall rating of B, equating to a Buy, in our POWR Ratings system. It has an A grade for Growth and a B for Quality. It is ranked #23 in the same industry.
We’ve also rated RMBS for Momentum, Value, Sentiment, and Stability. Get all the ratings here.
AVGO shares rose $1.06 (+0.20%) in after-hours trading Monday. Year-to-date, AVGO has declined -19.29%, versus a -12.83% rise in the benchmark S&P 500 index during the same period.
About the Author: Santanu Roy
Having been fascinated by the traditional and evolving factors that affect investment decisions, Santanu decided to pursue a career as an investment analyst. Prior to his switch to investment research, he was a process associate at Cognizant. With a master's degree in business administration and a fundamental approach to analyzing businesses, he aims to help retail investors identify the best long-term investment opportunities. More...
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