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Semiconductors, commonly referred to as microchips, are a bright highlight of technology, existing in nearly every aspect of our lives.
Over the last several years, chip stocks have exploded in popularity, and for an easy-to-understand reason – they have been stellar investments.
However, the fun has seemingly come to a screeching halt in 2022, with many of these once beloved stocks residing deep in the red year-to-date.
Three widely-popular chip stocks include Advanced Micro Devices (AMD - Free Report) , NVIDIA (NVDA - Free Report) , and Intel Corp. (INTC - Free Report) . Below is a chart illustrating the year-to-date performance of all three stocks, with the S&P 500 blended in as a benchmark.
Image Source: Zacks Investment Research
As we can see, it’s been anything but fun for these once high-flyers in 2022.
It raises a valid question: deep in the red, have investors been presented with a substantial buying opportunity? Let’s take a closer look.
NVIDIA
NVIDIA is a worldwide leader in computing technologies and is credited as the inventor of the highly successful GPU (Graphic Processing Unit).
Analysts have primarily pulled back their earnings outlooks over the last several months, landing NVIDIA into a Zacks Rank #4 (Sell).
Image Source: Zacks Investment Research
It’s no secret that NVDA shares are expensive; the company’s forward earnings multiple currently sits at 70.5X, well above its 49.2X five-year median and its Zacks Computer and Technology sector average of 22.2X.
The company carries a Value Style Score of an F.
Image Source: Zacks Investment Research
NVDA’s earnings are forecasted to take a sizable hit in its current fiscal year (FY23), with the Zacks Consensus EPS Estimate of $3.27 suggesting a 25% Y/Y decrease.
However, the company’s top-line looks to marginally improve, with the $26.9 billion revenue estimate for FY23 indicating a 0.1% Y/Y increase.
Image Source: Zacks Investment Research
Advanced Micro Devices
Advanced Micro Devices’ extensive product portfolio includes microprocessors, graphics processors, motherboard chipsets, and others. The company carries a Zacks Rank #5 (Strong Sell).
Analysts have lowered their earnings outlook across all timeframes over the last several months.
Image Source: Zacks Investment Research
AMD’s forward earnings multiple has slid down to 24.7X, a fraction of its 50.7X five-year median and modestly above its Zacks sector average.
While the current value may steer away value-focused investors, it’s at least nowhere near historical levels.
Image Source: Zacks Investment Research
AMD posted mixed earnings results in its latest print, reporting EPS in line with expectations and missing revenue estimates by a marginal 0.3%. The results snapped a long streak of positive surprises on both the top and bottom lines.
Image Source: Zacks Investment Research
Intel Corp.
Intel is the world’s largest semiconductor company and primary supplier of microprocessors and chipsets. Gradually, the company has reduced its reliance on the PC-centric business by moving into data-centric businesses.
The company has seen its near-term earnings outlook turn sour over the last several months, landing INTC into a Zacks Rank #5 (Strong Sell).
Image Source: Zacks Investment Research
The company’s growth profile leaves some to be desired; earnings are forecasted to decline 64% in its current fiscal year (FY22) and a further 2% in FY23.
The projected earnings declines come on top of forecasted revenue decreases of 18.6% in its current fiscal year (FY22) and a further 3% in FY23.
Still, its dividend helps set the company apart from other chip stocks; INTC’s annual dividend currently yields a solid 5.1% paired with a 5.4% five-year annualized dividend growth rate.
Image Source: Zacks Investment Research
Bottom Line
Semiconductor stocks had a fantastic run leading up to 2022 until the music was seemingly shut off, undoubtedly impacting many portfolios.
Still, it raises a valid question – are they worth another look now?
Currently, all three stocks above – Advanced Micro Devices (AMD - Free Report) , NVIDIA (NVDA - Free Report) , and Intel Corp. (INTC - Free Report) – carry either a Zacks Rank #4 (Sell) or #5 (Strong Sell), telling us that their near-term business outlook is under pressure.
For those interested in these once-beloved stocks, a great approach would be to wait until we start seeing positive earnings estimate revisions roll in.
In-Depth Zacks Research for the Tickers Above
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Time to Buy Beaten-Down Chip Stocks?
Semiconductors, commonly referred to as microchips, are a bright highlight of technology, existing in nearly every aspect of our lives.
Over the last several years, chip stocks have exploded in popularity, and for an easy-to-understand reason – they have been stellar investments.
However, the fun has seemingly come to a screeching halt in 2022, with many of these once beloved stocks residing deep in the red year-to-date.
Three widely-popular chip stocks include Advanced Micro Devices (AMD - Free Report) , NVIDIA (NVDA - Free Report) , and Intel Corp. (INTC - Free Report) . Below is a chart illustrating the year-to-date performance of all three stocks, with the S&P 500 blended in as a benchmark.
Image Source: Zacks Investment Research
As we can see, it’s been anything but fun for these once high-flyers in 2022.
It raises a valid question: deep in the red, have investors been presented with a substantial buying opportunity? Let’s take a closer look.
NVIDIA
NVIDIA is a worldwide leader in computing technologies and is credited as the inventor of the highly successful GPU (Graphic Processing Unit).
Analysts have primarily pulled back their earnings outlooks over the last several months, landing NVIDIA into a Zacks Rank #4 (Sell).
Image Source: Zacks Investment Research
It’s no secret that NVDA shares are expensive; the company’s forward earnings multiple currently sits at 70.5X, well above its 49.2X five-year median and its Zacks Computer and Technology sector average of 22.2X.
The company carries a Value Style Score of an F.
Image Source: Zacks Investment Research
NVDA’s earnings are forecasted to take a sizable hit in its current fiscal year (FY23), with the Zacks Consensus EPS Estimate of $3.27 suggesting a 25% Y/Y decrease.
However, the company’s top-line looks to marginally improve, with the $26.9 billion revenue estimate for FY23 indicating a 0.1% Y/Y increase.
Image Source: Zacks Investment Research
Advanced Micro Devices
Advanced Micro Devices’ extensive product portfolio includes microprocessors, graphics processors, motherboard chipsets, and others. The company carries a Zacks Rank #5 (Strong Sell).
Analysts have lowered their earnings outlook across all timeframes over the last several months.
Image Source: Zacks Investment Research
AMD’s forward earnings multiple has slid down to 24.7X, a fraction of its 50.7X five-year median and modestly above its Zacks sector average.
While the current value may steer away value-focused investors, it’s at least nowhere near historical levels.
Image Source: Zacks Investment Research
AMD posted mixed earnings results in its latest print, reporting EPS in line with expectations and missing revenue estimates by a marginal 0.3%. The results snapped a long streak of positive surprises on both the top and bottom lines.
Image Source: Zacks Investment Research
Intel Corp.
Intel is the world’s largest semiconductor company and primary supplier of microprocessors and chipsets. Gradually, the company has reduced its reliance on the PC-centric business by moving into data-centric businesses.
The company has seen its near-term earnings outlook turn sour over the last several months, landing INTC into a Zacks Rank #5 (Strong Sell).
Image Source: Zacks Investment Research
The company’s growth profile leaves some to be desired; earnings are forecasted to decline 64% in its current fiscal year (FY22) and a further 2% in FY23.
The projected earnings declines come on top of forecasted revenue decreases of 18.6% in its current fiscal year (FY22) and a further 3% in FY23.
Still, its dividend helps set the company apart from other chip stocks; INTC’s annual dividend currently yields a solid 5.1% paired with a 5.4% five-year annualized dividend growth rate.
Image Source: Zacks Investment Research
Bottom Line
Semiconductor stocks had a fantastic run leading up to 2022 until the music was seemingly shut off, undoubtedly impacting many portfolios.
Still, it raises a valid question – are they worth another look now?
Currently, all three stocks above – Advanced Micro Devices (AMD - Free Report) , NVIDIA (NVDA - Free Report) , and Intel Corp. (INTC - Free Report) – carry either a Zacks Rank #4 (Sell) or #5 (Strong Sell), telling us that their near-term business outlook is under pressure.
For those interested in these once-beloved stocks, a great approach would be to wait until we start seeing positive earnings estimate revisions roll in.