[ad_1]
After a roaring start to the year, the chip sector has lost about 7% since the start of July — and Evercore ISI analyst Matthew Prisco says “a return to outperformance will remain difficult” in the near term.
Still, there could be pockets of opportunity for investors in chip stocks who make selective bets, according to Prisco, who penned a recent note about the potential for “silver linings” in upcoming chip-sector earnings reports.
Prisco is partial to names actually seeing artificial-intelligence benefits, and he calls out shares of Nvidia Corp.
NVDA,
and Broadcom Inc.
AVGO,
as possible earnings-season winners tied to that theme.
“Fundamentally, we do not expect to hear anything majorly positive or negative for traditional [datacenter] spend, with demand likely stabilizing as inventories normalize,” Prisco said in his report. “Overall, and simply put, we continue to chiefly prefer exposure to AI-levered companies.”
Nvidia “remains our top pick overall, positioned well into earnings season based on sustainability of AI spend and beat/raise on the come,” he wrote. “The name also offers a surprisingly attractive valuation with [earnings per share] tracking to $20+” in calendar 2024.
Read: The Magnificent Seven could be called the messy seven after a ‘meh’ third quarter
Meanwhile, Broadcom also has AI opportunity, along with “successful navigation of a soft-landing” and the imminent closing of its deal for VMware Inc.
VMW,
later this month. “Add in a beat/raise track record and positive earnings season commentary supporting meaningful growth into 2024, and AVGO is positioned for outperformance,” Prisco said.
He also recommends that investors take a bullish stance on shares of Micron Technology Inc.
MU,
“A bottom is a bottom is a bottom,” Prisco wrote. “And while the recovery may not be starting out as strongly as hoped, we expect commentary through earnings season to be supportive of the memory upcycle.”
Opinion: Micron’s AI-focused chip won’t help financial results anytime soon
Further, he outlined a “tactical long” case for shares of Qualcomm Inc.
QCOM,
calling out potential catalysts such as the extension of the company’s modem deal with Apple Inc.
AAPL,
“Consumer-levered semis remain out of favor today (rightfully so), though QCOM is one name where we believe risk/reward is favorable today,” Prisco said.
Don’t miss: Qualcomm will make Apple’s iPhone modems until 2026, and its stock surges
[ad_2]
Source link
