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Gone are the days when large-cap semiconductor stocks liked it Nvidia Corporation (NASDAQ:NVDA) and Advanced Micro Devices Inc. (NASDAQ:AMD) were high on demand for pandemic-era electronic equipment, combined with chip shortages. Industry peer Intel Corporation (NASDAQ:INTC) didn’t fare as well in 2020 and 2021, but what does the outlook for all three look like now?
Today, chip makers and chip equipment makers are performing mediocre compared to other industries.
However, the prospects of each company are very different in their area of ​​specialization.
Nvidia is up more than 31% over the past three months, though that rally sputtered over the past month.
Nvidia specializes in chips for video games and other graphics applications. When it reported third-quarter results in mid-November, revenue beat expectations, though the company missed earnings expectations. Show MarketBeat data.
Revenue of $5.931 billion was 17% lower than the same quarter last year. As a result, earnings of $0.58 per share were 50% lower. It was the second quarter in a row in which earnings declined year-over-year.
The company expanded into data center chips, a business beset by US restrictions on chips exported to China. The collapse of cryptocurrency and a decline in crypto mining also hurt the gaming business unit. Covid lockdowns in China also hurt results.
Shares are up 4% since the earnings report. Most of those gains occurred during sessions where the broader market was trending higher as well.
Analysts have a “mediocre buy” rating on Nvidia, according to data collected by MarketBeat. The consensus price target is $205.23, representing a potential upside of 22.78%.
For the full year, Nvidia sees Wall Street earn $3.27 per share, down 25% from 2021. Next year, that will rebound by 33% to $4.35 per share.
Slower earnings growth ahead?
Advanced micro devicesMeanwhile, earnings are expected to grow this year and next, although Wall Street is seeing a bigger increase this year, with growth slowing to just 4% by 2023.
Despite, analyst price targets for AMD show a consensus target of $99.88, which would be a 52.88% increase. That may seem very optimistic for a stock that has fallen at a similar rate this year, down 53.77%. Nevertheless, it’s worth noting that stocks need more upside juice to regain their former value.
AMD competes with Nvidia in the graphics card market. While Nvidia has gained market share, some of that has come at Nvidia’s expense. Moreover, AMD has suffered for the same reasons as Nvidia.
On the other hand, while Nvidia and Nvidia have seen weakness in data centers in 2022, analysts expect AMD to see strong growth in that industry. However, Nvidia is still a formidable competitor announced its Grace line of CPU Superchipswhich will ship in early 2023.
In addition, Nvidia has the appeal (for some investors) to pay dividends, something AMD does not yet offer.
Intel’s long price drop
Meanwhile an established value Intel fell 44.45% this year, a continuation of a downturn that started in April 2021. This stock completely missed the rallies that Nvidia and AMD staged heading into the final months of 2021.
In addition, analysts have a poor view of Intel’s earnings growth prospects, predicting a 63% decline this year and a more moderate 2% decline in 2023. Intel has reported fall in net income in six of the past eight quarters, as shown by MarketBeat’s earnings data.
Intel continues to be the industry leader in the design and manufacture of chips for servers and personal computers. It also has a robust data center operation.
But Intel made several missteps when it came to new business ventures. Those mistakes kept the stock from recovering in 2020 as other techies balked from the initial pandemic-driven crisis. As a result, revenue growth over the past two years has been slight or non-existent.
The company’s missteps in recent years have included forays into drones, wearables, robotics, virtual reality, self-driving cars and smart glasses.
Last year, however, the company realized the error of its ways and hired a new CEO, Pat Gelsinger, who had served as a chip designer at Intel. A new CEO can often be a catalyst for renewed stock growth. Gelsinger has discussed ambitious plans to gain ground on Asian chipmakers and make capital investments in US facilities.
Of the three companies, Nvidia looks best positioned to deliver substantial price gains in 2023, based on analyst expectations for the company’s earnings.
But events like a new product announcement, a new partnership, or forecasts that beat expectations always have the potential to send shares higher than investors or analysts expect.
NVIDIA is part of the businesskinda.com Index, which tracks some of the largest publicly traded companies founded and run by entrepreneurs.
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