In this article, we discuss 5 semiconductor stocks that analysts are slashing price targets of. If you want to read our discussion on the semiconductor industry, go directly to Analysts are Slashing Price Targets of These 10 Semiconductor Stocks.
5. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 76
Intel Corporation (NASDAQ:INTC) is a semiconductor company that is excelling in the field of cloud computing, data center, the internet of things (IoT), and PC solutions.
The target price of the Santa Clara, California-based company was reduced from $45 to $40 by Blayne Curtis at Barclays on July 11. The analyst reiterated an Underweight rating on Intel Corporation (NASDAQ:INTC) stock. Curtis lowered the target price as he anticipates a 17% dip in Intel Corporation’s (NASDAQ:INTC) production of notebooks this year as compared to a prior forecast of a decline of 12%. The analyst recommends investors stay away from Intel Corporation (NASDAQ:INTC) stock as he believes the downturn has begun. Intel Corporation (NASDAQ:INTC) is set to announce its Q2 2022 results on July 28 with expected revenue and EPS of $17.98 billion and 52 cents, respectively.
Here’s what Baron Funds said about Intel Corporation (NASDAQ:INTC) in its Q1 2022 investor letter:
“Intel’s (NASDAQ:INTC) capital spending process is guided by a process they appropriately named “copy exactly.” This means that they attempt to “copy exactly” what they have already built and attempt to improve tried and true processes iteratively.”
Of the 912 hedge funds in Insider Monkey’s database, 76 funds held a stake in Intel Corporation (NASDAQ:INTC) as of Q1 2022.
4. Micron Technology, Inc. (NASDAQ:MU)
Number of Hedge Fund Holders: 78
Micron Technology, Inc. (NASDAQ:MU) is an Idaho-based semiconductor company providing memory and storage solutions. The company operates in 17 countries and has a headcount of over 40,000 employees.
On July 1, Harlan Sur and his team at JPMorgan lowered the target price on Micron Technology, Inc. (NASDAQ:MU) from $96 to $80 and reiterated an Overweight rating on the stock. The analysts shed light on the demand for semiconductor equipment from the cloud computing industry. The team at the investment firm believes that the capital expenditure of cloud data centers would increase by 25% YoY as opposed to a prior estimate of 28% YoY. However, the team expects the pace of growth to slow down to the mid-teens percentage in 2023. Micron Technology, Inc. (NASDAQ:MU) is down over 35% YTD, and the analyst believes that the company is trading “at or near a trough valuation.”
Here’s what Hazelton Capital Partners said about Micron Technology, Inc. (NASDAQ:MU) in its Q3 2021 investor letter:
“It’s hard to explain how shares of Micron Technology, manufacture of DRAM and NAND semiconductor chips, can fall during a global chip shortage. In most industries, focusing on demand can give you a clear insight into what lays ahead for a company. Today, the memory and storage chip industry is no different. However, in the past, companies focused on market share led to the reckless build out of chip fabrication plants (FABs), oversupply, falling average selling prices (ASPs) of memory and storage chips, lower margins, and declining cash flows. As the industry consolidated – there are now just 3 major producers of DRAM and 5 on the NAND side – rational behavior among the key players began to take hold as competitors began focusing more on R&D. Currently, chip pricing remains cyclical although less so than in the past and that cyclicality has a long-term upward bias. The ongoing transition to newer and more robust platforms (3D 176-layer NAND & 1-Alpha node DRAM) has provided the memory and storage chip industry with improved supply capacity under its current manufacturing footprint, ultimately pressuring ASPs. Over the past three years, as most of the large platform conversions have already taken place, being able to add more bits per wafer has reached a saturation point. With no major FAB build outs planned in the near-term by competitors Samsung or SK Hynix, constrained supply and flattening cost curves should lead to durable and upward sloping ASPs once the recent volatility from the chip shortage subsides.
Currently Micron Technology trades at just 8x 2022 estimate earnings. MU is expecting growth in both DRAM and NAND not just from the supply of more chips to data centers, artificial intelligence, the auto sector, and mobile devices, but also from greater demand for gigabyte capacity per unit within those segments. With a healthy balance sheet, improving return on invested capital, and expanding cash flows, not only should Micron benefit from improving future earnings but its multiple should also reflect the transition to a flattening cost curve.”
3. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 81
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is a leader in semiconductor foundry and manufactures around 11,617 products.
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) posted its Q2 2022 results on July 14. The company saw its net profit increase by 76.4% YoY to $7.94 billion. This was the highest increase in net profit in the last eight quarters and easily surpassed the consensus estimates of $7.34 billion. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) also provided strong guidance for Q3 2022 as it anticipates revenue to be around $19.8 billion to $20.6 billion as opposed to $14.88 billion during the same period last year. Furthermore, the company anticipates full-year revenue growth to be in the mid-30s percentage as opposed to an earlier forecast of 26% to 29% growth.
Despite the promising results, Mehdi Hosseini at Susquehanna reiterated a Neutral rating on Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) stock on July 14 and lowered the target price from $90 to $88. Hosseini cited the worse-than-expected inventory correction as the reason for the lowered price target.
Baron Funds discussed its stance on Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q1 2022 investor letter. Here’s what was said about the company:
“Semiconductor giant Taiwan Semiconductor Manufacturing Company Ltd. detracted in the first quarter due to rising geopolitical tensions, macroeconomic uncertainties, and concerns over softening demand for consumer electronics. We retain conviction that Taiwan Semi’s technological leadership, pricing power, and exposure to secular growth markets, including high-performance computing, automotive, and IoT, will allow the company to deliver above its 15% to 20% revenue growth target over the next several years.”
2. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 83
Advanced Micro Devices, Inc. (NASDAQ:AMD) is Santa Clara, California-based semiconductor company that manufactures products such as Adaptive SOCs, CPUs, FPGAs, and GPUs.
In a note issued on July 11, Blayne Curtis at Barclays slashed the price target on Advanced Micro Devices, Inc. (NASDAQ:AMD) by $40 to $85 and maintained an Equal Weight rating on the stock. The revised target price provides a modest potential upside of nearly 4.8% from the most recent closing price as of July 15. The analyst highlighted the expected weakness during the second half of 2022 and the weakening demand for notebook computers during June 2022 as the reason for lowering the target price. Curtis expects the decline in notebook production to be around 17% YoY as opposed to the prior expectation of a decline of 12% YoY. The analyst also highlighted that Advanced Micro Devices, Inc. (NASDAQ:AMD) maintained its guidance for Q2 2022 during its investor day.
Carillon Tower Advisers shared its stance on Advanced Micro Devices, Inc. (NASDAQ:AMD) in its Q4 2021 investor letter. Here’s what the firm said:
“Advanced Micro Devices (AMD) supplies semiconductor chips for central processing units (CPUs) and graphic processing units (GPUs). The firm has been gaining share against its primary competitor in the datacenter server CPU space, as this rival has been unable to match the design and manufacturing capabilities of AMD and its partners. Investors are also looking forward to the closing of the previously announced merger with a semiconductor manufacturer that is another one of the portfolio’s holdings. The merger will increase AMD’s capabilities in the Field Programmable Gate Array (FPGA) chip space, and the combined company should possess the potential to win additional market share in the datacenter chip market.”
Overall, 83 hedge funds reported owning a stake in Advanced Micro Devices, Inc. (NASDAQ:AMD) as of Q1 2022.
1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 102
NVIDIA Corporation (NASDAQ:NVDA) is the inventor of the graphic processing unit (GPU) and is currently a leader in the artificial intelligence cloud computing segment.
On July 14, Tristan Gerra at Baird lowered the price target on NVIDIA Corporation (NASDAQ:NVDA) from $165 to $150 and reiterated a Neutral rating on the stock. The revised target price is 4.8% lower than the last closing price as of July 15. The analyst lowered the target price because he thinks that NVIDIA Corporation (NASDAQ:NVDA) has an excessive inventory of GPUs due to a slowdown in various end markets. Gerra believes that NVIDIA Corporation (NASDAQ:NVDA) would have to lower its shipment of GPUs before the launch of the RTX 40 chip series. Furthermore, the company’s monthly graphic card sales are also weak when compared to previous seasonal sales data.
Here’s what ClearBridge Investments said about NVIDIA Corporation (NASDAQ:NVDA) in its Q1 2022 investor letter:
“Gaming is an attractive end market within the media/technology sector with strong growth and a long runway, particularly in mobile gaming. Unity’s platform provides an engine and toolkit for development and monetization of games, e-commerce and industrial applications, adding to our industry exposure, which also includes Nvidia (NASDAQ:NVDA) in graphic processing chips.”
ARK Investment Management is the leading hedge fund holder of NVIDIA Corporation (NASDAQ:NVDA) as of Q2 2022.
You can also take a peek at the 10 Dividend Stocks With Over 7% Yield and 10 Cheap ETFs to Invest In For Beginners.
