Many semiconductor-related stocks faced adverse price action in 2022 due to oversupply and other economic forces negatively impacting business conditions.
However, many of them have started 2023 off on the right foot, well in the green year-to-date. In fact, the Vaneck Semiconductor ETF is already up more than 15% on the year, outperforming the S&P handily.
And just recently, several stocks in the space have gotten upgrades from Barclays, including Qualcomm QCOM, Advanced Micro Devices AMD, and Seagate Technologies STX.
Below is a chart illustrating the performance of all three stocks year-to-date, with the S&P 500 blended in as a benchmark.
Image Source: Zacks Investment Research
As we can see, it’s been a hot start for all three. Let’s take a closer look at each one.
Seagate Technology
Headquartered in Ireland, Seagate Technology is the second-largest manufacturer of hard disk drives (HDDs) in the U.S. Currently, the company is a Zacks Rank #3 (Hold).
The company has struggled to exceed quarterly estimates in the face of challenging business conditions, falling short of earnings and revenue estimates in back-to-back quarters.
In its latest release, STX missed on the bottom line by nearly 30% and reported revenue 2% below expectations.
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The company’s earnings are forecasted to pull back in its current fiscal year (FY23), with the Zacks Consensus EPS Estimate of $1.68 indicating a decline of roughly 80% year-over-year.
Still, things kick back into gear for FY24, with earnings estimates suggesting year-over-year growth of 220%.
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In addition, the company does pay a solid dividend, currently yielding 4.4% annually, with a payout ratio sitting at 49% of its earnings.
Image Source: Zacks Investment Research
Qualcomm
Qualcomm designs, manufactures, and markets digital wireless telecom products and services based on the Code Division Multiple Access (CDMA) technology. The company’s earnings outlook has come under pressure, landing QCOM into a Zacks Rank #4 (Sell).
Image Source: Zacks Investment Research
Like STX, Qualcomm rewards its shareholders via an annual dividend yielding 2.3%, above the Zacks Computer and Technology sector average.
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And the company has managed to fare well in its quarterly prints, exceeding earnings and revenue estimates in seven consecutive quarters.
Image Source: Zacks Investment Research
Advanced Micro Devices
Advanced Micro Devices offers a broad portfolio of high-performance and adaptive processor technologies, combining CPUs, GPUs, FPGAs, Adaptive SoCs, and deep software expertise to enable leadership computing platforms for cloud, edge, and end devices.
Currently, AMD is a Zacks Rank #4 (Sell).
Image Source: Zacks Investment Research
For the company’s upcoming quarterly release on January 31st, the Zacks Consensus EPS Estimate of $0.67 suggests a roughly 25% year-over-year decline.
AMD’s top line looks to improve, with our $5.5 billion consensus quarterly revenue estimate suggesting a change of 14% year-over-year.
Image Source: Zacks Investment Research
Further, AMD’s valuation multiples have pulled back but remain on the higher end of the spectrum; the company’s shares trade at a 27.6X forward earnings multiple, a fraction of the 49.9X five-year median.
Image Source: Zacks Investment Research
Bottom Line
Following a challenging 2022, semiconductor stocks have gotten off to a much better start in 2023, undoubtedly a welcomed development among investors.
And all three above – Qualcomm QCOM, Advanced Micro Devices AMD, and Seagate Technologies STX – have recently received upgrades from Barclays, perhaps indicating that the tide could be turning.
Still, we want positive earnings estimate revisions to start rolling in, which would help further confirm that the outlook is shifting favorably.
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Advanced Micro Devices, Inc. (AMD) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
