Nvidia (NVDA) – Get Report, Qualcomm (QCOM) – Get Report and other chip stocks that traded flat on Wednesday after Advanced Micro Devices (AMD) – Get Report reported its seventh straight quarter of double-digit revenue growth driven by broad PC, server and games console strength.
AMD reported net income of $710 million, or 58 cents per share, after the closing bell on Tuesday, compared to $157 million or 13 cents per share a year ago. Adjusted earnings came in at 63 cents per share. Revenue was $3.85 billion, up 99% from a year ago.
Looking ahead, AMD said it expects third-quarter revenue of about $4.1 billion, up about 46% year-over-year. Analysts expect revenue of $3.82 billion. For the full year 2021, AMD now expects revenue growth of about 60%, up from previous expectations of about 50%.
The surge in AMD revenues and revenues, driven by the ongoing global semiconductor shortage that has pushed up both demand and prices for chips in everything from cars and refrigerators to children’s toys, was not enough to keep other chip and graphics makers convince cards.
Shares of Nvidia rose a moderate 0.1% to $192.30 in premarket trading Wednesday, while shares of Qualcomm, which will release its own second-quarter figures after the closing bell on Wednesday, fell 0.23% up to $140.60. Taiwan semiconductors (TSM) – Get Report US certificates were up 0.58% to $114.20; shares of Texas Instruments (TXN) – Get Report fell 0.62% to $183.99.
While some analysts have suggested that a recovery in chip production and supply coupled with a post-pandemic return to normal means the best is over for chipmakers, Jim Cramer of TheStreet told Action Alerts PLUS senior analyst Jeff Marks last week that a spike in the semiconductor industry may be premature.
“Perhaps these stocks are not as cyclical as we think and there is huge demand for them that is out of sync with the economy,” Cramer said.
Noting that AMD and Nvidia, two Action Alerts PLUS holdings, are far from their peak, Cramer said it’s time to “take a closer look at some of the stocks that are low.”
Meanwhile, Apple (AAPL) – Get Report, which is now also a chipmaker, posted much stronger-than-expected third-quarter results on Tuesday as soaring iPhone sales and a major comeback in sales in China fueled the top and bottom of the tech giant.
Apple’s role in the semiconductor world is twofold: it now makes chips for its own computers, reducing demand from its traditional third-party suppliers, but at the same time relies on other chipmakers and semiconductor manufacturers to make chips and other components for its iPhones, which are expected to be a major source of income in the second half of the year.
Shares of Apple fell 1.46% to $144.63 in premarket trading.
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