Despite Sustainability Concerns, Analyst Getting Positive On Nvidia And AMD Fundamentals

Semiconductor stocks have been some of the most volatile stocks in the market in the past few years.

After his latest round of supply change checks in the space, Pacific Crest analyst Michael McConnell has updated the firm’s outlook for a few of the most popular semiconductor stocks. McConnell said the recent checks left him “incrementally more positive on fundamentals” among semiconductor stocks.

Two of the hottest stocks in particular are Advanced Micro Devices, Inc. AMD and NVIDIA Corporation NVDA. Cryptocurrency mining market GPU demand has helped eliminate excess inventory for AMD and ease concerns over a soft gaming segment for the remainder of fiscal 2018, according to McConnell. Nvidia should experience similar near-term tailwinds in Q2 as well.

Pacific Crest has raised its Q2 earnings estimates for both Nvidia and AMD. The firm maintains a Sector Weight rating for AMD, but upgraded Nvidia from Underweight to Sector Weight.

Here’s an overview of what McConnell had to say about other semiconductor names.

Marvell Technology Group Ltd. MRVL will continue to reap the rewards of pricing power on switches and data center sales momentum. Pacific Crest upgraded Marvell from Sector Perform to Outperform and has a $22 price target for the stock.
On Semiconductor Corp ON is at risk of a correction after reports of customers double-ordering. Pacific Crest downgraded the stock from Overweight to Sector Weight.
Synaptics, Incorporated SYNA is at a near-term inflection point due to exposure to new LCD iPhones and an uptick in longer aspect/higher resolution TDDI drivers. Pacific Crest raised its earnings estimates but maintains a Sector Weight rating for Synaptics.
Broadcom Ltd AVGO’s RF, Wi-Fi, force touch and touch fingerprint sensing market exposure will likely increase its iPhone content by 40 percent. Pacific Crest maintains an Overweight rating and $280 price target for the stock.
Cavium Inc CAVM has enjoyed market enthusiasm for its ThunderX V2, but AMD’s Epyc server processor and the extended timeframe for bringing ThunderX V2 to market leaves visibility murky. Pacific Crest maintains a Sector Weight rating.
Cirrus Logic, Inc. CRUS is well-positioned for the upcoming iPhone cycle, and voice biometrics could serve as a longer-term driver as well. Pacific Crest maintains an Overweight rating and $75 price target.
Integrated Device Technology Inc IDTI may experience some near-term headwinds from a soft wireless infrastructure market in China, but the long-term bullish thesis remains intact. Pacific Crest lowered its Q2 earnings estimate, but maintains an Overweight rating and $30 price target.
Monolith Power Systems, Inc. MPWR has a positive catalyst ahead with the launch of Purley. Pacific Crest maintains an Overweight rating and $110 price target.
Silicon Motion Technology Corp. (ADR) SIMO is poised to benefit from positive SSD manufacturer commentary about improving 64-layer NAND yields and supply in the second half of 2017. Pacific Crest maintains an Overweight rating and $62 price target.
Skyworks Solutions Inc SWKS should see significant diversity receiver growth and unit growth related to the upcoming iPhone cycle. Pacific Crest maintains an Overweight rating and $120 price target.
Xilinx, Inc. XLNX will continue to benefit from secular growth in data center and automotive demand, but near-term results could be hurt by wireless infrastructure demand weakness in China. Pacific Crest has lowered its earnings forecast for Xilinx, but maintains an Overweight rating and $70 price target.