Latest news with #PHLXSemiconductorSector
Yahoo
01-05-2025
- Business
- Yahoo
Better Semiconductor Stock: AMD vs. Nvidia
The negative stock market sentiment has weighed on shares of AMD and Nvidia this year. However, both companies have been delivering healthy growth thanks to catalysts such as AI. It won't be surprising to see these chip stocks regain their mojo on account of recent tariff-related developments. The PHLX Semiconductor Sector index has been under duress this year and lost over 14% of its value thanks to the tariff-fueled economic uncertainty that has raised the potential of a global recession, which explains why some of the major names in this sector have performed poorly on the stock market in 2025. Shares of both Advanced Micro Devices (NASDAQ: AMD) and Nvidia (NASDAQ: NVDA) are down close to 20% so far this year. However, the recent tariff-related developments suggest that these semiconductor stocks could see a solid comeback, especially considering their impressive results in recent quarters. From pausing reciprocal tariffs for 90 days to exempting duties on imports of semiconductors and other equipment from China to starting trade talks, there are signs of the trade war easing. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » China has reportedly rolled back retaliatory tariffs on certain semiconductor components made in the U.S. So, there is a good chance that the cloud of uncertainty hovering over companies such as Nvidia and AMD that have been caught in the trade war could clear and help these semiconductor stocks regain their mojo. But if you have to buy one of these two chip stocks for your portfolio, which one should it be? Let's find out. AMD manufactures chips that go into applications such as data centers, personal computers (PCs), and gaming consoles, among others. The demand for AMD's chips that go into data centers and PCs has been picking up in recent quarters thanks to artificial intelligence (AI). Specifically, AMD's revenue from data center chip sales shot up 69% year over year in the fourth quarter of 2024 to $3.9 billion. The company credited this impressive growth to a ramp-up in sales of its data center graphics cards and server processors. While Nvidia is the dominant player in the AI GPU market, AMD has been gradually gaining ground over here. On its February earnings conference call, CEO Lisa Su remarked that the deployment of its MI300X AI accelerators "expanded with our largest cloud partners." The likes of Meta Platforms, Microsoft, IBM, and DigitalOcean are powering their AI models with AMD's chips, which is why the company has decided to accelerate the launch of its upcoming MI350 AI chips based on the CDNA 4 architecture. AMD points out that the CDNA 4 architecture delivers a 35x jump in AI compute performance as compared to the previous generation CDNA 3. The company has received positive customer feedback and believes that the MI350 family of AI chips could drive "deeper and broader customer engagements with both existing and net new hyperscale customers." AMD will begin shipments of the MI350 chips in the middle of 2025. So, there is a good chance that its data center revenue will continue to grow at a healthy pace thanks to AI. However, this is not the only AI-focused opportunity that the company is sitting on. The adoption of AI PCs is giving AMD's client processor business a nice boost. Its revenue from this segment rose 58% year over year in the fourth quarter of 2024, thanks to the strong demand for its Ryzen processors. AMD reported record sell-through of its desktop processors in the fourth quarter of 2024 and exceeded 70% share at several major retailers. The company is also pushing the envelope in the laptop space with the launch of 22 new mobile processors equipped with AI capabilities. AMD believes that its solid portfolio of laptop and desktop CPUs should help it grab a bigger share of the PC market in 2025. It is worth noting that AMD's overall CPU market share increased in the fourth quarter of 2024 to almost 25%, according to Mercury Research, and the points discussed above suggest that it can make a bigger dent in this market. So, the robust demand for chips used in servers and computers should remain a tailwind for AMD in 2025 and beyond, driving healthy growth in the company's top and bottom lines. Nvidia's dominant position in the market for AI chips helped the company deliver impressive growth in recent quarters. Nvidia ended fiscal 2025 with $130.5 billion in revenue, up by 114% from the previous year. Its revenue guidance of $43 billion for the current quarter points toward a potential jump of 65% in its top line, suggesting that its healthy pace of growth is here to stay. That's not surprising, as Nvidia reportedly controls a whopping 90% of the data center GPU market. This is also the reason why its data center revenue growth of 93% in the last reported quarter was higher than AMD's, even though Nvidia has a much larger revenue base. Looking ahead, Nvidia's technological advantage over AMD could help it remain the leading player in AI chips, and that puts the company in a terrific position to keep growing at a solid pace. After all, the market for AI chips is expected to jump by 2.5x by 2029, generating an annual revenue of $311 billion. Nvidia's data center revenue of $115 billion in the previous quarter indicates that it still has a lot of room for growth in this space, and it may be able to corner a significant chunk of the end-market opportunity thanks to its massive share of this space. Nvidia also has additional catalysts coming into play, such as the automotive market, where it is expecting its revenue to nearly triple this year following a 55% increase in the previous fiscal year. So, it is easy to see why analysts are forecasting Nvidia's earnings to increase by 48% in the current fiscal year, though don't be surprised to see the company doing better than that, as its margin profile should start improving once the production of its Blackwell AI processors ramps up. So, just like AMD, even Nvidia is thriving on solid semiconductor demand. But is it a better buy than its peer? Let's find out. We have seen that Nvidia is on track to clock healthy earnings growth this year. A similar scenario is expected to unfold at AMD, with an estimated earnings jump of 33% in 2025. Importantly, AMD's bottom-line growth is expected to grow to 36% in 2026. However, Nvidia expects a slowdown as its bottom line is projected to grow 28% in the next fiscal year. AMD's stronger growth forecast next year can be attributed to the company's diversified business, while the potential slowdown in Nvidia's earnings growth could be a result of intensifying competition in AI chips. What's more, AMD's price/earnings-to-growth ratio (PEG ratio) of just 0.44 indicates that it is undervalued after accounting for its annual projected earnings growth for the next five years, according to Yahoo! Finance. Nvidia seems overvalued right now, with a PEG ratio of 1.57, which can be attributed to a potential drop in its pace of earnings growth. So, AMD seems like the better semiconductor growth stock to buy right now, considering the points discussed above, though investors cannot go wrong by choosing Nvidia either, as the latter's massive addressable opportunity could ensure years of solid growth and stock upside. Before you buy stock in Advanced Micro Devices, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Advanced Micro Devices wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $598,818!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $666,416!* Now, it's worth noting Stock Advisor's total average return is 872% — a market-crushing outperformance compared to 160% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of April 28, 2025 Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, DigitalOcean, International Business Machines, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. Better Semiconductor Stock: AMD vs. Nvidia was originally published by The Motley Fool Sign in to access your portfolio
Yahoo
26-04-2025
- Business
- Yahoo
These 2 Artificial Intelligence (AI) Chip Stocks Could Soar 50% to 112% in the Next Year, According to Wall Street
This has been a difficult year for semiconductor stocks, which is evident from the 23% decline in the PHLX Semiconductor Sector index so far. Investors have decided to book profits and preserve capital owing to the uncertainty caused by the tariff-fueled trade war. This, in turn, has led to an increase in the possibility of a global recession. However, recent developments suggest there could be a reason for investors to remain optimistic. These include the 90-day pause in reciprocal tariffs to allow time for negotiations between the U.S. and its trade partners, the exemption of duties on imports of semiconductors, computers, processors, and some other electronic items, and news that the U.S. and China are engaged in trade negotiations. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » Favorable trade deals between the U.S. and its trading partners could bring the stock market out of the rut it is in. Moreover, disruptive trends such as artificial intelligence (AI) are here to stay thanks to the massive productivity gains they can deliver in the long run. That's why now would be a good time for savvy investors to take a closer look at a couple of top semiconductor stocks that have pulled back of late but have the potential to fly higher in the next year -- and in the long run thanks to the massive AI-driven opportunity they are sitting on. Shares of Broadcom (NASDAQ: AVGO) have retreated 28% in 2025, and that drop doesn't seem justified in light of the company's remarkably solid growth in recent quarters. Not surprisingly, analysts are upbeat about Broadcom's performance on the stock market in the coming year. The shares carry a 12-month median price target of $250 as per 44 analysts covering the stock, which points toward potential gains of 50% from current levels. Also worth noting here is that 89% of analysts covering Broadcom recommend buying it. That isn't surprising considering the impact of AI on the company's business. The company's AI revenue increased an impressive 77% year over year in the first quarter of fiscal 2025 (which ended on Feb. 2) to $4.1 billion. That was faster than the 25% growth in the company's overall quarterly revenue, which landed at $14.9 billion. AI, therefore, is now producing 27% of Broadcom's top line. Importantly, AI chips are likely to move the needle in a bigger way for Broadcom going forward as the company's custom processors are in tremendous demand from cloud hyperscale customers. Broadcom is expecting a 44% year-over-year increase in its fiscal Q2 AI revenue to $4.4 billion. However, don't be surprised to see the company doing better than that as more customers are expressing interest in its custom AI chips. Each of Broadcom's existing three hyperscale cloud customers is expected to deploy AI server clusters powered by more than 1 million of its custom AI chips, known as XPUs, over the next three years. Management says that "these three hyperscale customers will generate a Serviceable Addressable Market or SAM in the range of $60 billion to $90 billion in fiscal 2027." Considering that Broadcom is in the final stages of the development of custom AI accelerators for two more hyperscale customers, its AI-driven addressable market should ideally become bigger. Even better, Broadcom's AI-focused customer lineup is about to get bigger as "two additional hyperscalers have selected Broadcom to develop custom accelerators to train their next-generation frontier models." So, the company could eventually sell its AI chips to a total of seven cloud hyperscale companies in the future. That could open up the possibility for exponential growth in the company's AI revenue from fiscal 2024 levels of $12.2 billion. Its addressable market from the current three customers is quite huge already. All this explains why analysts are expecting Broadcom's earnings to jump by an impressive 36% in the current fiscal year to $6.64 per share. However, Broadcom delivered stronger earnings growth of 45% in fiscal Q1, suggesting that it has the potential to beat Wall Street's expectations, especially considering the new AI customers that it is bringing on board. So, investors looking to add a top AI stock to their portfolios right now would do well to buy this chip designer before it starts flying higher. Marvell Technology (NASDAQ: MRVL) is Broadcom's competitor in the custom AI chip market, and shares of the company have slipped a massive 55% this year. As a result, Marvell is now trading at just 22 times trailing earnings. Buying this chip stock at this valuation is a no-brainer given its phenomenal growth. After reporting 27% year-over-year growth in fiscal 2025's Q4 (which ended on Feb. 1), Marvell is expecting its fiscal 2026 Q1 revenue to jump at a greater pace of 61%. Meanwhile, it is expecting earnings to jump by more than 2.5 times from the year-ago period. This tremendous growth makes it clear why Marvell's 12-month price target of $105 as per 39 analysts covering the stock points toward a potential jump of 112% from current levels. What's more, 92% of the analysts suggest buying Marvell stock, which is not surprising considering its red-hot growth. Importantly, its growth seems sustainable going forward. Marvell is the second-largest player in the custom AI chip market after Broadcom, with the latter controlling an estimated 70% of this space. However, analysts are expecting both companies to be on equal footing in the future, driven by Marvell's recent wins in the custom AI processor market. Marvell currently has two high-volume customers for its custom AI chips, and the good part is that it is expecting both customers to expand the adoption of its processors. Also, management pointed out on the company's March earnings conference call that it is on track to start production of custom AI chips for a third customer in 2026. The company points out that this third customer can drive "a very significant amount of incremental revenue for Marvell over the next several years." What's more, Marvell is pushing the envelope on the product-development front. The company is working with its foundry partner TSMC to roll out custom AI processors and connectivity chips made using a 2-nanometer (nm) manufacturing process. The two companies have already developed a working sample of the 2nm silicon, according to an update issued last month. This could give Marvell an advantage over Broadcom considering that the 2nm chip samples of the latter are expected in June this year. So, the possibility of Marvell gaining ground in the AI chip market is definitely solid. All this explains why analysts are expecting remarkable growth of 79% in the company's earnings in the current fiscal year, which could indeed help this semiconductor stock deliver the remarkable returns that it is expected to deliver over the next year. Throw in Marvell's cheap valuation, and it is easy to see why it would be a good idea to buy this stock hand over fist following its big drop this year, as it may not be long before it regains its momentum thanks to its outstanding AI-fueled growth. Before you buy stock in Broadcom, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Broadcom wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $591,533!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $652,319!* Now, it's worth noting Stock Advisor's total average return is 859% — a market-crushing outperformance compared to 158% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of April 21, 2025 Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom and Marvell Technology. The Motley Fool has a disclosure policy. These 2 Artificial Intelligence (AI) Chip Stocks Could Soar 50% to 112% in the Next Year, According to Wall Street was originally published by The Motley Fool
Wall Street Journal
06-04-2025
- Business
- Wall Street Journal
Chip Stocks Dive Following Trump's Threat of More Tariffs — Heard on the Street
Chips were never safe from tariff pain despite their initial exclusion from President Donald Trump's new levies on Wednesday. His announcement aboard Air Force One yesterday that the sector was in his crosshairs for direct tariffs has rightly rattled investors further. Chip stocks fell across the board Friday, extending a disastrous two-day period for the sector. Nvidia is down more than 14% since Wednesday's close, shedding nearly $400 billion in market cap. Broadcom, Intel, Advanced Micro Devices and Qualcomm also declined, leading the PHLX Semiconductor Sector index down more than 17% in a day and a half of trading. That's significantly worse than the broader market: the S&P 500 is down by around 9% over the same period.
Wall Street Journal
03-04-2025
- Business
- Wall Street Journal
Exempt or Not, the Chip Industry Won't Escape Tariffs
It sounded like a welcome reprieve. But Donald Trump's exemption of semiconductors from his reciprocal tariffs offers little comfort for an industry whose products live inside an ever-expanding set of consumer goods. The exemption means the U.S.'s direct chip imports, which totaled around $82 billion last year, will only be subject to Trump's baseline 10% tariff. Yet most chip imports are indirect. Chips typically are made overseas, packaged up there and inserted into electronics shipped across the globe—including to the U.S., where they will be subject to tariffs as high as 49%. Even many U.S.-made chips are sent to Taiwan, China or Southeast Asia for final assembly before being re-exported to end customers. That indirectness makes sizing up the impact to the semiconductor industry difficult. One thing is for sure: The hit will be substantial. The U.S. imported some $521 billion of machinery, $478 billion of electronics and $386 billion of vehicles last year, according to a Bernstein Research analysis. Those things tend to contain a lot of chips, and chip sales fall if people respond to higher prices by buying fewer of them. That will eventually translate into lower revenues and growth rates for chip makers, potentially crimping profits and stock-market valuations. 'Overall we don't see much in the way of positive feelings here for the semi group (or frankly for anything else),' Bernstein analyst Stacy Rasgon said in a note. No wonder the biggest chip stocks tumbled Thursday; the PHLX Semiconductor Sector index was down about 7.5% at one point. Big chip buyers fell too: Apple was down around 8% and PC manufacturer Dell Technologies fell more than 15%. It's hard to find bright spots. The tariffs give chip makers no additional incentive to grow manufacturing in the U.S. Their products are generally exported into the Asian supply chain anyway before they come back inside tariffed goods. Companies that already have large U.S. footprints, like Texas Instruments and Analog Devices, don't get a leg up on foreign competitors because those rivals receive the semiconductor tariff exemption. Both of their stocks were down sharply Thursday. A wave of order cancellations through the supply chain is likely on tap as chip makers and their customers anticipate flagging consumer demand caused by higher prices, Wolfe Research analyst Chris Caso said in a note. This would be similar to what happened during Covid lockdowns in 2020. Consumer electronics will likely be hit hardest, but the tariffs will also increase the cost of highly demanded artificial-intelligence servers proffered by Nvidia, he said. This likely calls into question second-quarter earnings guidance across the industry. 'We think there is simply nowhere to hide from these effects,' Caso said. Nvidia was down more than 6% Thursday. Chip companies have yet to issue profit warnings, reflecting the as-yet-uncertain extent of the impact. To dampen it, the industry may try to negotiate with the Trump administration to reduce tariffs where they hurt most, or to exempt more electronics and other goods that chips go into. In a best-case scenario, the Trump administration responds by backing off many of the most damaging tariffs, making Thursday's declines a buying opportunity. Given Trump's penchant for doubling down instead of backing down, the opposite scenario—even more tariffs—seems more likely. Write to Asa Fitch at
Yahoo
02-03-2025
- Business
- Yahoo
Prediction: This Magnificent Artificial Intelligence (AI) Chip Stock Will Be Worth $2 Trillion in 5 Years
Semiconductor stocks have been in impressive form on the market over the past three years, as the demand for chips used for training and deploying artificial intelligence (AI) models in data centers has shot up remarkably during this period. Not surprisingly, the PHLX Semiconductor Sector index's gains of 44% in the past three years have been higher than the 29% jump clocked by the tech-laden Nasdaq-100 Technology Sector index over the same period. Taiwan Semiconductor Manufacturing (NYSE: TSM), or TSMC, has been one of the big beneficiaries of the spurt in semiconductor spending, with its shares rising 69% in the past three years (as of this writing). TSMC's solid rally has brought its market cap to $980 billion. The good part is that this semiconductor bellwether seems capable of delivering more upside in the long run as well, and it may even hit $2 trillion in market cap. Let's look at the reasons why. It is easy to see why TSMC stock has shot up. The company fabricates chips for all the major chip designers, including Nvidia and AMD. In fact, all the fabless chipmakers that have been designing AI chips are using TSMC's fabrication plants to produce their chips. Consumer electronics companies such as Apple that are looking to offer AI solutions to their customers in their devices also tap TSMC to manufacture advanced processors. All this explains why the Taiwan-based foundry giant has seen a sharp uptick in its growth in the past year. More importantly, TSMC's dominant 64% share of the global foundry market means that it is well-placed to make the most of the secular growth in the AI chip market over the long run. According to one estimate, the global AI chip market could reach an annual growth rate of almost 35% over the next decade. The market's impressive growth is expected to be powered by the penetration of AI into multiple industries ranging from healthcare to finance to automotive, among others. As TSMC manufactures chips for the leading chip designers serving these industries, including the likes of Qualcomm and Broadcom, the company should ideally be able to sustain the healthy growth that it has been clocking in the past year. This is precisely what management pointed out on the company's January earnings conference call: Underpinned by our technology leadership and broader customer base, we now forecast the revenue growth from AI accelerators to approach a mid-40% CAGR for the five-year period starting off the already higher base of 2024. We expect AI accelerator to be the strongest driver of our HPC platform growth and the largest contributor in terms of our overall incremental revenue growth in the next several years. What's more, TSMC is anticipating its total revenue to increase at an annual rate of around 20% for the next five years. This could send TSMC's top line to almost $225 billion after five years from last year's figure of just over $90 billion. TSMC has a five-year average sales multiple of 9, and a similar multiple after five years could send its market cap to just over $2 trillion. The above scenario indicates that TSMC stock is capable of more than doubling in the next five years. However, it may be able to deliver more upside than that if the market decides to reward it with a richer valuation. It is worth noting that TSMC is currently trading at 11 times sales. So, the sales multiple we are assuming after five years means that it will trade at a discount at that time. But it won't be surprising to see it trade at a premium at that time as well to its five-year average, especially considering that its share of the foundry market has been improving. More specifically, its foundry market share increased by three percentage points in the third quarter of 2024, compared to the prior-year period. It may be able to further strengthen its position in this market. Samsung is the second-largest foundry in the world, with a much smaller share of 12%. TSMC is looking to extend the gap with Samsung, as the former is looking to move to a more advanced 2-nanometer (nm) manufacturing node. TSMC is expected to start producing 2nm chips for customers in the second half of 2025. This may give it a slight edge over Samsung, which may start 2nm production in the fourth quarter of the year. More importantly, TSMC has reportedly planned improvements to make its 2nm technology better so that it can deliver higher computing performance and efficiency. As such, TSMC's grip over the global semiconductor market is likely to remain solid over the long run. Buying this stock right now looks like a no-brainer, as its earnings multiple of 27 is lower than the Nasdaq-100 index's multiple of 34 (using the index as a proxy for tech stocks). Ever feel like you missed the boat in buying the most successful stocks? Then you'll want to hear this. On rare occasions, our expert team of analysts issues a 'Double Down' stock recommendation for companies that they think are about to pop. If you're worried you've already missed your chance to invest, now is the best time to buy before it's too late. And the numbers speak for themselves: Nvidia: if you invested $1,000 when we doubled down in 2009, you'd have $323,920!* Apple: if you invested $1,000 when we doubled down in 2008, you'd have $45,851!* Netflix: if you invested $1,000 when we doubled down in 2004, you'd have $528,808!* Right now, we're issuing 'Double Down' alerts for three incredible companies, and there may not be another chance like this anytime soon.*Stock Advisor returns as of February 24, 2025 Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, Nvidia, Qualcomm, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy. Prediction: This Magnificent Artificial Intelligence (AI) Chip Stock Will Be Worth $2 Trillion in 5 Years was originally published by The Motley Fool Sign in to access your portfolio
