Weekly Tech Update: AMD, NVDA, CREE, FFIV, TXN

The semiconductor industry was 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. According to the Semiconductor Industry Association (SIA), the global semiconductor industry posted record sales of $336 billion in 2014, a 9.9% increase from 2013. ^[1]

Despite short-term macroeconomic challenges, worldwide sales of semiconductors reached $83.1 billion (a 6% increase compared to Q1 2014) during Q1 2015 and grew 4.8% year-on-year for the month of April. ^{[2] [3]} According to the WSTS Spring 2015 global semiconductor sales forecast, worldwide sales will increase 3.4% in 2015 and 2016, and 3% in 2017. ((Global Semiconductor Sales Increase in April; Steady Growth Projected for Next Years, SIA, June 2, 2015))

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

See Our Complete Analysis for These Companies Here

AMD

AMD (NYSE:AMD) unveiled its line of next-generation Radeon graphics chips — Radeon R9 Fury series, Radeon R9 300 series and Radeon R7 300 series —  at the Electronic Entertainment Expo (E3) held in Los Angeles this week. (Read: AMD Launches Revolutionary Graphics Cards To Gain Share In PC Gaming) The company also announced that Samsung Electronics selected its Embedded G-Series system-on-chip (SoC) for a new line of all-in-one cloud monitors featuring integrated thin client technology. (Read Press Release)

AMD’s stock price is up 10% so far this week, and the company has a current market cap of $2 billion. Our price estimate of $2.90 for AMD is at a 15% premium to the current market price. We forecast the company to report revenue and net income of $5 billion and $9 million, respectively. Our GAAP diluted EPS estimate for the company stands at $0.01 as compared to the market consensus of negative $0.24.

Nvidia

Nvidia (NASDAQ:NVDA) introduced new updates, games, applications and features for its SHIELD TV device this week. The company also announced that Tripwire made Killing Floor 2 the first game to use Nvidia’s PhysX FleX technology for soft tissue and fluid interaction. (Read Press Releases) Nvidia’s stock traded between $21 – $22 this week, which translates into market cap of $12 billion. Our price estimate of $22.45 for the company is close to the current market price. For fiscal 2016 (ending January 2016), we expect Nvidia to report revenues of $4.7 billion and net income in excess of $700 million. Our GAAP diluted EPS for the company stands at $1.34 compared to the market consensus of $0.76.

CREE

Cree (NASDAQ:CREE) reinforced its leading position in the LED market by announcing the compatibility of its Connected LED bulb with market leader in home automation, SmartThings, which is part of the Samsung Global Innovation Center. (Read: Cree Collaborates With SmartThings, Takes Home Automation To A New Level)

Our valuation of $35 per share for Cree is at an approximate 15% premium to the current market price of $31. Cree has a current market cap of approximately $3.4 billion. We estimate Cree will report revenue and net income of $1.8 billion and $113 million, respectively, for calendar year 2015. For fiscal year 2015 (fiscal year ends in June), we forecast GAAP EPS of $1.15, whereas the market consensus stands at $1.07.

F5 Networks

For the seventh time in a row, F5 Networks (NASDAQ:FFIV) received the Asia Pacific Application Delivery Controller (ADC) Vendor of the Year award, at the 2015 Frost & Sullivan Asia Pacific ICT Awards. Accounting for 52% of the market, the company continues to be the leader in ADCs.

F5′s stock fluctuated between $124 and $128 last week. The company has a current market cap of $9.2 billion. Our price estimate of $128 for the company is almost in line with the current market price. For calendar year 2015, we forecast F5 to report revenue and net income of $2 billion and $220 million, respectively. For fiscal year 2015 (fiscal year ends in September), our non-GAAP EPS estimate stands at $6.37, which is slightly lower than the market consensus of $6.43.

Texas Instruments

Texas Instruments (NASDAQ:TXN) introduced a new Sitara AM4376 processor for just $7, extending its Sitara processor portfolio with a more economical option. The company also introduced the industry’s lowest power wideband radio frequency (RF) synthesizer. (Read Press Releases)

TI’s stock price fluctuated between $53 and $54 this week. The company has a current market cap of approximately $58 billion. Our price estimate of $50 for Texas Instruments is at a marginal discount to the current market price. We estimate the company will report revenue and net income of $13.9 billion and $3.12 billion this year, respectively. Our non-GAAP earnings per share (EPS) estimate for 2015 stands at $3.00 compared to the market consensus of $2.70.

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1. Global Semiconductor Industry Posts Record Sales in 2014, SIA, February 2, 2015 [↩]
2. First Quarter Semiconductor Sales Up 6 Percent Compared to Last Year, Semiconductor Industry Association, May 4, 2015 [↩]
3. Global Semiconductor Sales Increase in April; Steady Growth Projected for Next Years, SIA, June 2, 2015 [↩]