NVDA post-market reaction (-7%) highlights the valuation problem. The correction of the tech sector should resume
NVDA 2Q beat consensus, 3Q guidance beat consensus, the stock declined post-market.
Overall, growth in Tech is mediocre (PC, smartphone, enterprise, telcos), with growth concentrated in AI Semis and Hyperscalers
The Tech segment of the NASDAQ 100 is expensive, Non-Tech is not.
Auto / Industrial Semiconductors: the bad & the ugly #2
The late reporters Infineon, Microchip, ON Semi, confirm what the early reporters said. Auto getting weaker. Industrials in EU, Japan, US remains weak. Clients’ inventory digestion still ongoing.
Tech valuations: still not low. Reasons for a large correction are usually quite simple - as it is now
Despite a ~20% correction, valuations are still high, based on 2025 expectations that are high. That’s the core of the on-going correction. 2Q earnings were bad? Not really. Nasdaq and SOX Consensus (IBES) net income forecasts for 2024-25-26 are barely changed. So it’s the job report and the macro, isn’t it? I’ll keep my unqualified macro views to myself and more practically: 1) valuations remain high to very high 2) 2025 Consensus expectations are high, room for upside? Not clear for Semis
Auto & Industrial Semiconductors: the bad & the ugly (NXPI, Renesas, STM, TXN). Mostly negative comments from firms, imo.
Results of Automotive & Industrial semiconductor firms (Analog Devices, Renesas, ST Micro, Texas Instruments) all point to 2 problems. Auto demand is weakening, unexpectedly, as EV demand is below plans and inventories high. Industrial demand is not recovering in EU, Japan, US.
TSMC 2Q24 is good, 3Q guidance even better with margins improvement.
TSMC delivered a good 2Q24, 3Q guidance is even better with margins going up. Revenue growth of High Perf Computing incl. AI and EUV nodes is extremely impressive: above +60% YoY
SEMI valuations: stretched. Room for consensus to move higher? Not easy.
SEMI valuations: stretched. Room for consensus to move higher? Not easy.