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The Zacks Analyst Blog Highlights: Micron, Qualcomm and Broadcom
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For Immediate Release
Chicago, IL – July 2, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Micron (MU - Free Report) , Qualcomm (QCOM - Free Report) and Broadcom (AVGO - Free Report) .
Here are highlights from Monday’s Analyst Blog:
Trade Momentum and Chip Suppliers: What You Should Know
President Trump and Chinese President Xi made headway in trade discussions at the G-20 Summit this weekend and US chip suppliers are reaping the benefits. I discussed the implication of Huawei on US chip suppliers and the impact it would have as a concession in my article Huawei Ban’s Affliction on US Tech Stocks I released on Friday.
This weekend Huawei was temporarily taken off of the US blacklist, allowing US suppliers to resume business with this smartphone behemoth, boosting US chip stocks. Morning trading has Micron up 4.6%, Qualcomm up 2.2%, Broadcom up 3.6%, and many other chip stocks surging as depressed Q2 and Q3 expectations for chip suppliers are lifted. The benchmark semiconductor ETF (SOXX) opened up almost 5% but has traded down this morning to an intraday gain of 2.4%. As you can see below, Q2 has been a volatile time for SOXX and the semi industry.
This semiconductor “sugar rush” may be short-lived and I wouldn’t recommend jumping into these stocks on this news alone. We need to look at the broader implications of the category itself and where it is expected to head in the near future. With or without the trade war, semis are expected to see slow to negative growth over the next year or two with soft tech output expectations.
China’s economy is slowing, with China’s GDP growth falling to its lowest levels since 2009 and their manufacturing PMI, a leading economic indicator, has slowed to some of its lowest levels in a decade. Whether we are involved in a trade war with China or not is negligible to the fact that their demand for our chips is likely to slow.
Take Away
This short-term surge in semis isn’t something to jump out of your chair at, as an investor you need to sit back and look at the broader industry and how you believe it is valued as well as its future expectations. The semiconductor industry has seen a lot of volatility over the last 52 weeks, which comes with the territory, but this industry isn’t cheap. Currently trading at the higher end of its 2-year forward PE. I would wait for Q2 results to be released for more color on both how they have been performing in this shaky quarter and forward guidance from management on this sector.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: Micron, Qualcomm and Broadcom
For Immediate Release
Chicago, IL – July 2, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Micron (MU - Free Report) , Qualcomm (QCOM - Free Report) and Broadcom (AVGO - Free Report) .
Here are highlights from Monday’s Analyst Blog:
Trade Momentum and Chip Suppliers: What You Should Know
President Trump and Chinese President Xi made headway in trade discussions at the G-20 Summit this weekend and US chip suppliers are reaping the benefits. I discussed the implication of Huawei on US chip suppliers and the impact it would have as a concession in my article Huawei Ban’s Affliction on US Tech Stocks I released on Friday.
This weekend Huawei was temporarily taken off of the US blacklist, allowing US suppliers to resume business with this smartphone behemoth, boosting US chip stocks. Morning trading has Micron up 4.6%, Qualcomm up 2.2%, Broadcom up 3.6%, and many other chip stocks surging as depressed Q2 and Q3 expectations for chip suppliers are lifted. The benchmark semiconductor ETF (SOXX) opened up almost 5% but has traded down this morning to an intraday gain of 2.4%. As you can see below, Q2 has been a volatile time for SOXX and the semi industry.
This semiconductor “sugar rush” may be short-lived and I wouldn’t recommend jumping into these stocks on this news alone. We need to look at the broader implications of the category itself and where it is expected to head in the near future. With or without the trade war, semis are expected to see slow to negative growth over the next year or two with soft tech output expectations.
China’s economy is slowing, with China’s GDP growth falling to its lowest levels since 2009 and their manufacturing PMI, a leading economic indicator, has slowed to some of its lowest levels in a decade. Whether we are involved in a trade war with China or not is negligible to the fact that their demand for our chips is likely to slow.
Take Away
This short-term surge in semis isn’t something to jump out of your chair at, as an investor you need to sit back and look at the broader industry and how you believe it is valued as well as its future expectations. The semiconductor industry has seen a lot of volatility over the last 52 weeks, which comes with the territory, but this industry isn’t cheap. Currently trading at the higher end of its 2-year forward PE. I would wait for Q2 results to be released for more color on both how they have been performing in this shaky quarter and forward guidance from management on this sector.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.