Nvidia’s results, Indian tariffs, French markets - what’s moving markets
A report from Cantor's Quarterly Semiconductor Investor Survey highlighted a shift in investor sentiment within the semiconductor sector. The survey, which gathered insights from institutional investors, indicated a decreased weighting in semiconductor investments, with over 40% of respondents now overweight in the sector compared to over 60% previously. This change reflects a more cautious approach to the semiconductor space, with revenue growth expectations declining.
The survey also revealed that investor interest is increasingly concentrated on companies with strong artificial intelligence (AI) leverage, particularly in the Data Center and Networking segments. Notably, NVIDIA (NASDAQ:NVDA), Broadcom (NASDAQ:AVGO), and Taiwan Semiconductor Manufacturing Company (NYSE:TSMC) are favored, with Broadcom gaining more traction compared to TSMC over the past three months. However, Advanced Micro Devices (NASDAQ:AMD) has seen a slight decrease in favor, with investor AI revenue expectations for the company declining since the last survey.
In contrast to AI-levered names, the survey showed that over 50% of investors are currently underweight in semiconductor capital equipment, a significant increase from around 20% in July. Companies like Lam Research Corporation (NASDAQ:LRCX) have lost favor, while ASML Holding (NASDAQ:AS:ASML), Applied Materials (NASDAQ:AMAT), and KLA Corporation (NASDAQ:KLAC) are now preferred investments. This shift is attributed to reduced expectations for wafer fabrication equipment (WFE) forecasts in the coming years and a more near-term focus among investors.
Consumer, smartphone, and analog segments continue to rank low in terms of investability through the end of the year, with Qualcomm (NASDAQ:QCOM) and Microchip Technology (NASDAQ:MCHP) topping the list of short positions. However, there is some optimism for the analog sector, as expectations for a cyclical inflection have moved forward, with half of the respondents anticipating a turnaround in the second half of 2024.
Lastly, the survey identified a disconnect regarding Micron Technology (NASDAQ:MU), which is perceived to offer an excellent risk/reward opportunity. Despite memory stocks being viewed as investable, Micron received minimal votes as a preferred AI play outside of NVIDIA and was more frequently voted as a top short than a top long. The report suggests that once the market better appreciates the upside driven by High Bandwidth (NASDAQ:BAND) Memory (HBM), Micron's stock could see a significant upward movement.
In other recent news, Qualcomm is considering acquiring Intel (NASDAQ:INTC), a move that could significantly reshape the semiconductor industry. However, KeyBanc Capital Markets has adjusted Qualcomm's rating from Overweight to Sector Weight, citing factors such as the company's AI setbacks, rising competition from Apple (NASDAQ:AAPL), and aggressive price competition in the smartphone market. KeyBanc also estimates that losing the modem business with Apple could lead to a $1.55-$1.65 reduction in earnings per share.
A Mizuho trade desk analyst has expressed skepticism about the viability of the takeover due to significant regulatory hurdles and the complexity of Intel's operations. Apollo Global Management (NYSE:APO) has also proposed investing up to $5 billion in Intel, a development that could offer an alternative to a full sale. Qualcomm also faces a reduced fine of €238.7 million ($265.5 million) for antitrust violations.
InvestingPro Insights
As the semiconductor landscape shifts, Qualcomm (NASDAQ:QCOM) presents an interesting case for investors. Despite being mentioned as a potential short position in the survey, InvestingPro data reveals some compelling aspects of the company's financial health and market position.
Qualcomm's revenue for the last twelve months as of Q3 2024 stood at $37.35 billion, with a robust gross profit margin of 55.89%. This indicates the company's ability to maintain strong pricing power in a competitive market. Additionally, Qualcomm's operating income margin of 26.34% suggests efficient operational management.
InvestingPro Tips highlight Qualcomm's strong dividend history, having raised its dividend for 21 consecutive years and maintaining payments for 22 years. This commitment to shareholder returns is further evidenced by the current dividend yield of 2.04%. For investors focused on long-term value, these factors may offset short-term market sentiment.
It's worth noting that 21 analysts have revised their earnings upwards for Qualcomm's upcoming period, potentially signaling positive expectations despite the current market positioning. The company's next earnings date is set for November 6, 2024, which could provide more clarity on its performance and outlook.
For readers interested in a deeper analysis, InvestingPro offers 11 additional tips for Qualcomm, providing a more comprehensive view of the company's prospects in this evolving semiconductor landscape.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.