Weekly Tech Update: AMAT, AMD, BRCM, MU, NVDA, TXN

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AMAT: Applied Materials logo
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Applied Materials

The semiconductor industry has been one of the strongest performing sectors in 2014. Driven by the continued strength in personal, network and service provider communications, and increasing electronics adoption around the world, the Philadelphia Semiconductor Index (Sox) is up over 20% year-to-date. In comparison, the S&P 500 index is up just 10% year-to-date. Earlier this month, the Semiconductor Industry Association (SIA) reported that, at $87 billion (5.7% sequential and 8% annual growth), the global semiconductor sales outperformed the latest World Semiconductor Trade Statistics industry forecast in Q3 2014 and were the highest ever quarterly sales for the industry. [1] However, the calendar Q3 2014 earnings report have been mixed as participants are experiencing a deceleration.

Below is a weekly update for some of the technology companies that Trefis covers.

See Our Complete Analysis for These Companies Here

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Applied Materials

Leading semiconductor equipment manufacturer Applied Materials (NASDAQ:AMAT) reported its Q4 2014 and fiscal year 2014 earnings on November 13 (see our earnings article). The company’s stock price initially declined marginally, as its Q1 2015 guidance failed to meet analyst expectations, but the stock finally closed on a positive note on Friday. Last week, Applied also announced its collaboration with Samsung and PSK to develop an advanced patterning solution for the manufacture of future generations of NAND and DRAM device designs (Read Press Release).

Our price estimate of $22 for Applied is slightly below the current market price (market cap of approx $28 billion). We forecast the company to report revenue and net income of approximately $10 billion and net income of $1 billion for calendar year 2014.

AMD

Last week, AMD (NYSE:AMD) announced that its Embedded G-Series SoC is powering the new Gizmo 2 development board from GizmoSphere and its FirePro GPUs is enabling GSI Research facility’s heavy ion studies, reiterating AMD’s expertise in High Performance Computing (HPC). The company was also awarded research grant of $32 million for HPC research focused on HSA, APUs and Memory (Read Press Releases).

AMD’s stock price has been on a downhill trend since August 2014. Last week, the stock declined by approximately 7%. Our valuation of $4 is more than 50% above the current market price. The company’s current market cap is around $2 billion. We forecast AMD’s 2014 revenue to increase to $5.3 billion and net income to turn positive by year end. Our GAAP and non-GAAP diluted EPS estimates stand at $0.15 and $0.38, respectively.

Broadcom

Broadcom (NASDAQ:BRCM) added over 40 channel partners, including module manufacturers, value-added resellers, independent design houses, original device manufacturers (ODMs) and an e-commerce distribution channel, to its network last week, to better position itself for the expanding Internet of Things (IoT) and high volume Ethernet IC markets (Read Press Release).

Broadcom’s stock has been on a uphill trend since the company reported strong Q3 2014 earnings last month. Our valuation of $41 for Broadcom is slightly lower than the current market price of $42 (market cap of $22.8 billion). Our 2014 revenue and net income estimates for the company stand at $8.4 billion and $660 million, respectively. Our non-GAAP diluted EPS forecast is $2.86, as compared to the market consensus of $2.92.

Micron Technology

Last week, memory chipmaker Micron Technology (NASDAQ:MU) showcased new memory and storage solutions for the Internet-of-Things (IoT) at the electronica show. The company also announced that its Twin-Quad family of Serial NOR Flash will provide customers with a migration path to double the bandwidth from existing quad-I/O solutions. (Read Press Releases)

Our $32 valuation for Micron is in line with the current market price, which translates into a market cap of approximately $35 billion. For calendar year 2014, we forecast revenue, net income and diluted non-GAAP net income of approximately $17 billion, $2.4 billion and $3.15, respectively.

Nvidia

Two months after Nvidia (NASDAQ:NVDA) filed patent lawsuits against Qualcomm (NASDAQ:QCOM) and Samsung (OTC:SSNLF), alleging that they infringed on Nvidia’s patented GPU technology without proper compensation, Samsung hit back at Nvidia, accusing the company of infringing several of its semiconductor-related patents and for making false claims about its products (see Samsung Hits Back At Nvidia With A Patents Lawsuit). Last week, Nvidia announced a software upgrade (Android 5.0 Lollipop) for its Shield tablet and launched free GRID on-demand game streaming services for Shield users until July 2015. The U.S. Department of Energy unveiled its plan to build two GPU accelerated supercomputers, based on next-generation IBM POWER servers with Nvidia’s Tesla accelerators and NVLink high-speed GPU interconnect technology. Nvidia has received an $18 million grant from the U.S. Department of Energy (Read Press Releases).

Nvidia’s stock traded between $19 – $20 last week. Our $19.50 valuation for the company is almost in line with the current market price, which translates into a market cap of nearly $11 billion. We estimate Nvidia will report revenues of around $4.3 billion and net income in excess of $600 million this year.

Texas Instruments

Last week, Texas Instruments (NASDAQ:TXN) announced new data converter and digital isolation families that offer reinforced isolation to help protect electronic equipment from high line voltages. [2] TI’s stock traded around $51 last week. Our valuation of $45 for TI is more than 10% lower than the current market price. We expect the company to report revenue and net income of $13.1 billion and $2.8 billion this year, respectively. Our GAAP diluted EPS forecast for TI stands at $2.59 while the market consensus is at $2.51.

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Notes:
  1. Global Semiconductor Industry Posts Highest-Ever Quarterly Sales, Semiconductor Industry Association, November 3, 2014 []
  2. Company Press Release []