At CES this week, Truist analyst William Stein hosted investor meetings with Nvidia Corp (NASDAQ: NVDA), Intel Corp (NASDAQ: INTC), ON Semiconductor Corp (NASDAQ: ON), and Analog Devices, Inc (NASDAQ: ADI).
While each company has unique growth opportunities and challenges, the tone of meetings was a bit more optimistic than Stein or investors might have guessed, especially considering recent negative updates from Microchip Technology Inc (NASDAQ: MCHP) and Mobileye Global Inc (NASDAQ: MBLY).
The analyst noted this reflects the out-of-phase conditions of the semi-market today, with revenue performance by the company, end market, and product type all running in different directions.
He retained his constructive view on semiconductors, and his favorite names remain Buy-rated NVDA, NXP Semiconductors N.V. (NASDAQ: NXPI), Belden Inc (NASDAQ: BDC), and TTM Technologies, Inc (NASDAQ: TTMI).
The overarching theme of this year's CES event was AI. Consumer and edge AI applications were particularly prevalent, ranging from smart home tech, appliances, AI companions (e.g., nurse assistants), and AI PCs.
Stein noted that the rapid expansion of AI at the edge aligns with recent comments from Hold-rated INTC and Advanced Micro Devices Inc (NASDAQ: AMD) that promoted AI moving out of the cloud and into consumer objects and PCs.
The analyst envisioned a massive opportunity for semiconductors to supply into these markets, evolving competition from traditional MCU vendors to CPU vendors, AI-focused startups, and OEM-designed ASICs.
Sustainability was once again a prominent theme at CES. It was clear that companies are trying to use new clean-energy tech to help offset the rising cost of living while positively impacting the environment.
Like many recent shows, next-generation gaming technology was a staple on the show floor. Intel displayed its new 14th-gen mobile processors already included in laptops from major OEMs.
NVDA announced new Super versions of its GeForce GPUs. NVDA also announced the open beta of RTX Remix, allowing users to enhance classic game experiences with generative AI texture tools and complete ray tracing.
Last week, the SOX and NASDAQ were up 3% while the S&P was up 2%, Piper Sandler analyst Harsh V. Kumar noted. Starting with NVDA, the company will likely launch a new China-specific chip by 2Q24, per Reuters.
The chip was slightly delayed due to issues with server manufacturers integrating the chip. Additionally, it was found that Chinese military bodies and AI research institutes could purchase small batches of banned NVDA GPUs last year despite export controls.
On the positive side, India's Yotta plans to deploy $1 billion worth of H100s and H200s by 2025, which amounts to ~32,000 total units.
In terms of earnings, MCHP announced preliminary results for the December quarter, which indicated revenues declined 22% versus previous guidance of down 15%-20% Q/Q.
The weakness reflected excess inventory with industrial and automotive customers. Kumar expected most analog companies to have issues with the industrial and automotive end markets this year.