4 Semiconductor Stocks Set to Top Estimates This Earnings Season
The semiconductor industry was in the spotlight throughout fourth-quarter 2021 owing to the huge gain that it witnessed despite the pandemic-led uncertainties.
This is evident from the monthly data on global semiconductor sales from the Semiconductor Industry Association. For November 2021, the sales figure was $49.7 billion, up 23.5% and 1.5% on a yearly and monthly basis, respectively. The cumulative annual total of semiconductors sold in the same month reached 1.05 trillion, marking the first ever such record.
Additionally, the latest Gartner report indicates that semiconductor revenues hit $583.5 billion in 2021, up 25.1% from what was reported in 2020. The worldwide semiconductor revenues exceeded the $500-billion mark for the first time.
This apart, the stellar fourth-quarter 2021 performance delivered by Texas Instruments TXN testifies solid growth in the semiconductor space.
TXN benefited from a solid demand environment across automotive and industrial end markets. Also, the growing momentum across the communication equipment and enterprise systems markets contributed well. Texas Instruments remains optimistic about the continuous rise in demand for electronic components. Further, its better-than-expected guidance for first-quarter 2022 remains noteworthy.
Growth Factors to Consider
The coronavirus-induced solid trend for remote-working and learning is expected to have continued aiding chip companies on back of buoyant demand for desktops, notebooks and enterprise laptops.
Accelerating deployment of 5G, driven by increasing demand for the ultrafast Internet connectivity, is expected to have contributed well to growth of semiconductor companies in the quarter under review.
Moreover, the growing adoption of 5G smartphones is expected to have driven the semiconductor revenues in the fourth quarter.
Additionally, robust demand for server solid state drives for datacenters, which has been driving growth in the NAND market for a while, is expected to have benefited the semiconductor stocks.
Also, the growing proliferation of advanced technologies, including AI, ML, AR/VR, cloud computing, IoT, quantum computing and blockchain, is likely to have continued bolstering semiconductor demand.
Moreover, the rapid adoption of autonomous vehicles, advanced driver assisted systems (ADAS), gaming, wearables, drones and VR/AR devices, continuously fueling growth in the semiconductor industry, is expected to have remained a major positive.
How to Make the Right Choice?
With the presence of several industry participants, finding the right semiconductor stocks with the potential to beat on earnings can be a daunting task. Our proprietary methodology, however, makes this fairly simple.
You could narrow down your choices by looking at the stocks with the perfect combination of the two key elements — a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings ESP is our proprietary methodology for determining stocks with maximum chances of beating estimates at their next earnings announcement. It is the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.
Our research shows that for stocks with the apt mix of ingredients, the odds of a positive earnings surprise are as high as 70%.
Key Stocks
Norwood, MA-based Analog Devices ADI is scheduled to report fiscal first-quarter 2022 results on Feb 16. The company has an Earnings ESP of +0.25% and a Zacks Rank #2, currently.
Analog Devices is an original equipment manufacturer of semiconductor devices, specifically, analog, mixed signal and digital signal processing integrated circuits. Its product portfolio includes amplifiers and comparators, converters, video encoders and decoders, CODECs, filters and processors, RF switches and microcontrollers to name a few.
The Zacks Consensus Estimate for earnings has been revised 0.6% upward to $1.79 per share in the past 30 days.
Analog Devices, Inc. Price and EPS Surprise
Analog Devices, Inc. price-eps-surprise | Analog Devices, Inc. Quote
Santa Clara, CA-based NVIDIA NVDA is scheduled to report fourth-quarter fiscal 2022 results on Feb 16. NVDA has an Earnings ESP of +0.55% and a Zacks Rank of 2, currently.
NVIDIA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit or GPU. Further, it is a dominant name in the data center, professional visualization and gaming markets.
The Zacks Consensus Estimate for earnings has been stable at $1.22 per share in the past 30 days.
NVIDIA Corporation Price and EPS Surprise
NVIDIA Corporation price-eps-surprise | NVIDIA Corporation Quote
Monolithic Power Systems MPWR, based in Kirkland, WA, is slated to report fourth-quarter 2021 results on Feb 10. MPWR has an Earnings ESP of +2.83% and a Zacks Rank #2, currently.
MPWR designs, develops and markets high-performance power solutions. It focuses on the market for high-performance analog and mixed-signal integrated circuits (ICs). Further, Monolithic’s products are widely utilized in industrial applications, telecommunication infrastructures, cloud computing, automotive and consumer applications.
The Zacks Consensus Estimate for earnings has been revised 0.5% upward to $1.87 per share in the past 30 days.
Monolithic Power Systems, Inc. Price and EPS Surprise
Monolithic Power Systems, Inc. price-eps-surprise | Monolithic Power Systems, Inc. Quote
Fort Collins, CO-based Advanced Energy AEIS is slated to release fourth-quarter 2021 results on Feb 9. AEIS has an Earnings ESP of +0.96% and a Zacks Rank #3, currently.
Advanced Energy is a power technology company. AEIS is one of the leading suppliers of power subsystems and process-control technologies to the semiconductor industry.
The Zacks Consensus Estimate for earnings has been steady at 96 cents per share in the past 30 days.
Advanced Energy Industries, Inc. Price and EPS Surprise
Advanced Energy Industries, Inc. price-eps-surprise | Advanced Energy Industries, Inc. Quote
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