As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q1. Today, we are looking at processors and graphics chips stocks, starting with AMD (NASDAQ:AMD).
The biggest demand drivers for processors (CPUs) and graphics chips at the moment are secular trends related to 5G and Internet of Things, autonomous driving, and high performance computing in the data center space, specifically around AI and machine learning. Like all semiconductor companies, digital chip makers exhibit a degree of cyclicality, driven by supply and demand imbalances and exposure to PC and Smartphone product cycles.
The 9 processors and graphics chips stocks we track reported a strong Q1. As a group, revenues beat analysts’ consensus estimates by 2.6% while next quarter’s revenue guidance was 0.5% below.
Luckily, processors and graphics chips stocks have performed well with share prices up 15.6% on average since the latest earnings results.
AMD (NASDAQ:AMD)
Founded in 1969 by a group of former Fairchild semiconductor executives led by Jerry Sanders, Advanced Micro Devices (NASDAQ:AMD) is one of the leading designers of computer processors and graphics chips used in PCs and data centers.
AMD reported revenues of $7.44 billion, up 35.9% year on year. This print exceeded analysts’ expectations by 4.4%. Overall, it was a satisfactory quarter for the company with a solid beat of analysts’ adjusted operating income estimates but an increase in its inventory levels.
“We delivered an outstanding start to 2025 as year-over-year growth accelerated for the fourth consecutive quarter driven by strength in our core businesses and expanding data center and AI momentum,” said Dr. Lisa Su, AMD chair and CEO.
The stock is up 28.4% since reporting and currently trades at $126.51.
Is now the time to buy AMD? Access our full analysis of the earnings results here, it’s free.
Best Q1: Penguin Solutions (NASDAQ:PENG)
Based in the US, Penguin Solutions (NASDAQ:PENG) is a diversified semiconductor company offering memory, digital, and LED products.
Penguin Solutions reported revenues of $365.5 million, up 28.3% year on year, outperforming analysts’ expectations by 6.1%. The business had a stunning quarter with a significant improvement in its inventory levels and an impressive beat of analysts’ EPS estimates.
Penguin Solutions achieved the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 11.9% since reporting. It currently trades at $20.20.
Is now the time to buy Penguin Solutions? Access our full analysis of the earnings results here, it’s free.
Weakest Q1: Lattice Semiconductor (NASDAQ:LSCC)
A global leader in its category, Lattice Semiconductor (NASDAQ:LSCC) is a semiconductor designer specializing in customer-programmable chips that enhance CPU performance for intensive tasks such as machine learning.
Lattice Semiconductor reported revenues of $120.2 million, down 14.7% year on year, in line with analysts’ expectations. It was a slower quarter as it posted an increase in its inventory levels and a slight miss of analysts’ adjusted operating income estimates.
The stock is down 3.8% since the results and currently trades at $51.02.
Read our full analysis of Lattice Semiconductor’s results here.
Allegro MicroSystems (NASDAQ:ALGM)
The result of a spinoff from Sanken in Japan, Allegro MicroSystems (NASDAQ:ALGM) is a designer of power management chips and distance sensors used in electric vehicles and data centers.
Allegro MicroSystems reported revenues of $192.8 million, down 19.9% year on year. This result surpassed analysts’ expectations by 4.3%. Overall, it was a very strong quarter as it also logged a significant improvement in its inventory levels and a solid beat of analysts’ EPS estimates.
Allegro MicroSystems had the slowest revenue growth among its peers. The stock is up 66.2% since reporting and currently trades at $31.07.
Read our full, actionable report on Allegro MicroSystems here, it’s free.
Broadcom (NASDAQ:AVGO)
Originally the semiconductor division of Hewlett Packard, Broadcom (NASDAQ:AVGO) is a semiconductor conglomerate spanning wireless communications, networking, and data storage as well as infrastructure software focused on mainframes and cybersecurity.
Broadcom reported revenues of $15 billion, up 20.2% year on year. This number was in line with analysts’ expectations. More broadly, it was a mixed quarter as it also logged a narrow beat of analysts’ adjusted operating income estimates but an increase in its inventory levels.
Broadcom had the weakest performance against analyst estimates among its peers. The stock is down 3.4% since reporting and currently trades at $251.15.
Read our full, actionable report on Broadcom here, it’s free.
Market Update
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
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