Following KeyBanc Capital Markets' quarterly supply-chain findings, the firm's semiconductor analyst John Vinh revisited his estimates for the chip stocks in his coverage universe.
Mixed outlook: Supply-chain checks showed mixed results for the various segments within the semiconductor industry, said Vinh in a note released Monday. Analog saw "signs of life" within China and muted performance elsewhere, he said, adding that the first quarter will likely mark the bottom.
The PC market is set to see roughly flattish performance for the year, the analyst said. In the smartphone market, iPhone demand weakened in China, while it was stronger in India, Vinh said.
The analyst said iPhone shipments are still expected to remain largely flat at about 230 million units for the year as weaker iPhone 15 demand is being offset by stronger demand for legacy models, including the iPhone 12/14 in India and also in China.
Also, high-end Android phone demand remained healthy, offsetting the potential weakness in the mid-and low-end market, he added.
Artificial intelligence-related demand remained robust, the analyst said. "AI remains robust as expected, despite plenty of cross-currents, while CoWoS capacity is expected to double in 2025," he said. The analyst noted that server supply-chain feedback suggested a slight improvement in demand in the first quarter due to a meaningful improvement in the overall supply and lead times for Nvidia Corp. (NASDAQ: NVDA) H100 GPUs.
TSMC was looking to double its CoWoS capacity in 2025 to 600K interposers, while Nvidia was also planning to double its capacity at TSMC to 300K interposers, Vinh said. "This would suggest that generative AI semiconductor revenues are expected to more than double in 2025," he said.
Stock Implications: Vinh said the channel checks are:
- Most positive for Nvidia, Micron Technology, Inc. (NASDAQ: MU), Qualcomm, Inc. (NASDAQ: QCOM) and Monolithic Power Systems, Inc. (NASDAQ: MPWR).
- Positive for Arm Holdings plc (NASDAQ: ARM) and analog processor manufacturers Analog Devices, Inc. (NASDAQ: ADI), Microchip Technology Incorporated (NASDAQ: MCHP) and Texas Instruments, Inc. (NASDAQ: TXN).
- Mixed for Advanced Micro Devices, Inc. (NASDAQ: AMD).
- Negative for Skyworks Solutions, Inc. (NASDAQ: SWKS), Marvell Technology, Inc. (NASDAQ: MRVL), ON Semiconductor Corporation (NASDAQ: ON) and Intel Corporation (NASDAQ: INTC).
- Nvidia: maintained Overweight rating and upped price target from $1,100 to $1,200
- Micron: maintained Overweight rating and upped price target from $135 to $150
- Qualcomm: maintained Overweight rating and upped price target from $180 to $205
- Monolithic Power: maintained Overweight rating and upped price target from $830 to $850
- Arm Holdings: maintained Overweight rating and upped price target from $120 to $135
- Analog Devices: maintained Overweight rating and $230 price target
- TI: maintained Overweight rating and $200 price target
- AMD: maintained Overweight rating and $270 price target
- Skyworks: downgraded from Overweight to Sector Weight,
- Marvell Tech: maintained Overweight rating and reduced price target from $95 to $90
- On Semiconductor: maintained Overweight rating and $100 price target
- Intel: maintained Sector Weight rating