Nvidia, Micron, Qualcomm in focus as KeyBanc boosts estimates on China, AI hopes
Apr. 08, 2024 8:52 AM ET
By: Chris Ciaccia, SA News Editor
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Nvidia (NASDAQ: NVDA), Micron Technology (NASDAQ: MU), Qualcomm (NASDAQ: QCOM) and a host of other semiconductor stocks were in focus on Monday as KeyBanc Capital Markets weighed in on the sector.
"Our quarterly supply chain findings were mixed," analysts John Vinh and Jim Long wrote in a note to clients. "In analog, we’re seeing signs of life within China, while [rest of world] remains muted, but 1Q appears to be the bottom; PCs are still tracking to roughly flat for the year; while iPhone demand is weaker in China, demand in India is stronger; Android high end remains healthy, offset by softness in mid/low. AI remains robust as expected, despite plenty of cross currents, while [chip-on-wafer-on-substrate] capacity is expected to double in 2025."
Vinh and Long raised their estimates and price targets on Nvidia, Micron, Qualcomm and Monolithic Power Systems ( MPWR). They also raised their price target on Arm ( ARM), while pointing out the findings were positive for Analog Devices ( ADI), Texas Instruments ( TXN) and Microchip Technology ( MCHP).
They tweaked estimates on AMD (NASDAQ: AMD) after finding the picture was "mixed" for the Dr. Lisa Su-led company, while they believe it's negative for Skyworks Solutions ( SWKS), Marvell Technology ( MRVL), ON Semiconductor ( ON) and Intel ( INTC).
The firm also downgraded Skyworks to Sector Weight from Overweight noting that its ability to see content growth in smartphones is "increasingly becoming more challenging," as 5G smartphones have a 60% penetration rate. Additionally, the company is seeing increased competition in the Apple ( AAPL) ecosystem from Murata and Qualcomm and in Androids, especially in China.
"We are also trimming our forward estimates as we had previously anticipated content growth in the iPhone 16," the analysts wrote. "However, with QCOM able to bundle its RF FE for low band with its modem, this is unlikely. While we expect SWKS to become more active in M&A, it’s difficult for us to underwrite an OW rating without a more compelling organic growth story."
Nvidia
The firm boosted its target to $1,200 on Nvidia, noting the GB200 could generate revenue as much as $90B to $140B by itself, citing feedback from supply chain that indicates it could have an average selling price of $1.5M to $2M. Additionally, Nvidia is looking to double its CoWoS capacity at Taiwan Semiconductor ( TSM) next year and demand for the H20 in China is "much higher than anticipated" and could generate as much as $9B to $12B in incremental revenue this year, the analysts said.
AMD
The ramp of the MI300X is "going well," the analysts said, adding that there is a chance the first-quarter could see more than $1B in AI-related revenue, as demand is greater than what can be supplied, due in part to lack of silicon-on-insulator.
However, Microsoft ( MSFT) is supposedly cutting its forecast for the MI300X to reallocate costs to the GB200 due to the higher cost of Nvidia's offering.
The firm has an Overweight rating and $270 price target on AMD.
Micron
The analysts raised their price target on Micron to $150, citing strong feedback on its high bandwidth memory offering, HBM3E, compared to SK Hynix's offering.
"With Samsung currently not competitive, we believe MU is in the pole-position heading into the ramp of B100/B200," the analysts wrote. "We believe MU has enough HBM capacity to meaningfully exceed its outlook of several hundred millions in FY24 and to ship over $1B in HBM revenues in CY24. As investors increasingly will recognize how strong MU’s position is in HBM, we expect the stock to rerate and be given credit as an 'AI' play."
Qualcomm
The analysts raised their price target on Qualcomm to $205, ciitng "strong" demand for high-end and flagship smartphones; market share gains in the mid-range from Mediatek; the possibility of regaining 100% of the market in next year's Galaxy S25; Microsoft cutting back on Oryon, which could boost Arm AI-based PCs; and the fact it is still receiving orders from Huawei.
"We increasingly see an opportunity for QCOM to rerate, as the Company is well positioned to benefit from AI at the edge in both PCs and smartphones," the analysts wrote.
Other companies
The feedback for positive for Broadcom ( AVGO) while it was "moderately negative" for Cirrus Logic ( CRUS) and Qorvo ( QRVO), given their association with Apple, which has experienced "disappointing sell-through trends in China," the analysts said. |
