It isn’t especially easy to find high-performing chip stocks presently. The overall state of the industry can’t be characterized as being strong. Yet, there are still companies performing well despite overall headwinds. Some semiconductor firms continue to post stellar results that best not only industry averages but also recent performance.
That isn’t easy given that global semiconductor sales fell by 8.7% sequentially in the first quarter of 2023. Year-over-year declines were even more drastic with global Q1 revenues falling 21.3% compared to Q1 ‘22.
So companies that continue to grow in this current climate deserve real attention for their strong operations and results.
| KLAC | KLA Corp. | $386.38 |
| ON | ON Semiconductor | $79.87 |
| MCHP | Microchip Technology | $74.17 |
| ASML | ASML | $657.14 |
| AMD | AMD | $97.02 |
| AVGO | Broadcom | $626.27 |
| NXPI | NXP Semiconductors | $165.20 |
KLA Corp. (KLAC)
KLA Corp. (NASDAQ:KLAC) is a chip stock that doesn’t garner tons of attention despite being a solid company.
The firm provides technology and devices that use advanced inspection tools, measurement systems, and analytics for semiconductors. It isn’t a well-known fabless manufacturer grabbing constant headlines but remains important nonetheless.
What’s important about KLA for the purposes of this discussion is the fact that the company performed exceptionally well overall. While industry-wide revenues fell globally KLA managed to grow.
Its most recent earnings report shows the company has increased its revenues by 6.2% year-over-year to $2.433 billion.
Those results were stellar relative to the overall landscape and KLA’s internal performance also. The $2.43 billion in sales were near the top of the guidance range of $2.20 to $2.50 billion.
The process controls firm expects that next quarter’s revenues could range as high as $2.375 billion giving investors a reasonable expectation of continued strong performance.
ON Semiconductor (ON)
By now, investors should understand well that ON Semiconductor (NASDAQ:ON) is a very respectable chip stock.
It has made a strong name for itself over the past years and become synonymous with the emergence of the automotive chip market. That association put ON into the limelight earlier in the pandemic where it continues to shine.
In fact, the automotive and industrial end markets contributed to 79% of ON Semi’s revenues in Q1. The company posted revenues that increased by a modest 1%, rising to $1.9597 billion.
That said, the company bested expectations overall which is what matters to the markets. ON shares have responded in kind moving up in the days following the May 1 earnings announcement.
ON Semiconductor expects Q2 revenues to be within $50 million of $2.025 billion so growth will remain muted for the next few months. Performance exceeding the industry and EV growth potential will continue to keep ON stock among highly relevant chip stocks moving forward.
Microchip Technology (MCHP)
Microchip Technology (NADSAQ:MCHP) stock is clearly among chip companies currently posting stellar results: The company’s Q4 ended March 31 and saw revenues increase by 21.1% on a year-over-year basis.
Sales grew by 2.9% over the last quarter. All of the data points to a clear conclusion that Microchip Technology is bucking the overall downtrend.
March 31 ended Microchip Technology’s fiscal year which resulted in record revenues of $8.439 billion.
Breaking records is the story of Microchip Technology in the fiscal year and most recent quarter. Operating income, net income, per-share earnings, and other metrics all reached record levels at the company.
The company provides smart connected control solutions. In other words, it’s an Internet of Things (IoT) chip firm. IoT industry growth projections remain very strong through 2030 and beyond with annual growth rates exceeding 25%.
All of this means that Microchip Technology is performing well and should reasonably be expected to continue to perform well in the mid term and beyond.
ASML (ASML)
ASML (NASDAQ:ASML) remains a vitally important firm in the semiconductor industry and a stock worth investing in based on recent performance.
The company manufactures ultra-expensive lithography machines costing upwards of $200 million a piece. The machines are said to be some of the most complex ever built and are utilized in the production of leading-edge chips at the 5 and 3-nanometer scale.
ASML is currently the only firm capable of producing EUV machines. Current estimates are that China may be next to crack the technology but that might take 5 years. In short, ASML maintains a massive advantage over an incredibly important industry.
Q1 results were strong with continued sales increase on a sequential basis. YoY increases were even more impressive but the market doesn’t seem to be judging ASML on its results from a year ago.
System sales more than doubled on a YoY basis in Q1 reaching $5.34 billion. Overall revenues nearly doubled, reaching $6.746 billion. The good news is that ASML stock still has massive upside for investors currently.
AMD (AMD)
AMD (NASDAQ:AMD) didn’t actually post stellar results in the first quarter. Not relative to global growth metrics anyway.
The 9% decline in sales at the company was right in line with the global sales decline for the first quarter.
Nor were AMD’s per-share earnings particularly strong either, at -$0.09. In fact, they were far worse than the $0.56 EPS the company posted a year earlier. Losses at AMD were substantial and drastically different than those a year prior.
But none of that seems to matter to the market as share prices only temporarily fell following the May 2 announcement. Two days later it was as of nothing had happened and prices had fully rebounded.
The market believes in AMD perhaps based on its performance over the past 3 years as revenue per share has grown by 35.7% even including recent problems.
Investors care more about continuing Cloud business potential and AI prospects than metrics.
Broadcom (AVGO)
Broadcom (NASDAQ:AVGO) won’t release earnings again until early June. So it’s not technically a chip stock that’s on fire after posting stellar results.
In fact, Broadcom last released earnings back in early March.
Results were strng with revenues increasing by 16%. Further, earnings grew impressively, increasing by $1.302 billion on a year-over-year basis. If that weren’t enough, free cash flows jumped up by $548 million. In short, there was a lot of data to support the notion that AVGO stock was one to purchase.
All of that said, it’s more about future performance than the past in the stock market. AVGO is expected report an EPS of approximately $8.23 this quarter. A year prior EPS reached $8.39. Any surprise would surely help.
But what will really help Broadcom’s share price is any positive news related to its planned acquisition of VMWare. If the company can persuade regulators that its planned takeover is pro-competitive expect AVGO shares to jump.
NXP Semiconductors (NXPI)
NXP Semiconductors (NASDAQ:NXPI) performed better than anticipated upon releasing results on May 1.
The $3.12 billion in first-quarter sales for the company were better than anticipated and above the high end of guidance.
Overall, NXP Semiconductor’s sales declined, falling 0.5% in the quarter YoY. Yet the results were strong given context. First, those sales exceeded guidance. Second, they were far better than industry-wide sales averages. And perhaps most importantly, NXP showed real progress in its strongest lines of business.
Automotive revenues accounted for $1.828 billion of the company’s $3.12 billion in first-quarter sales growing 17% YoY. Mobile and IoT sales declined drastically during the quarter, falling 26% and 35%, respectively.
However, NXP still managed to do better than expected indicating it has the ability to leverage its strength in automotive. If the company can improve those other businesses, especially IoT, expect it to really appreciate in price moving forward.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.