Broadcom, Marvell, Analog Devices And More Semiconductor Stocks Poised For 6%-8% Revenue Growth: JPMorgan

Zinger Key Points
  • JPMorgan's Q1 outlook highlights Broadcom, Marvell, Micron, Analog Devices and others as semiconductor sector stars.
  • Analyst expects the semiconductor industry revenue to improve 6-8% Y/Y in 2024 with a more back-end recovery profile.

JPMorgan analyst Harlan Sur shares an optimistic outlook for the semiconductor industry in anticipation of the Q1 earnings season.

The sector, including semiconductors, semiconductor capital equipment (semicap), and chip design software (EDA/IP), has continued to outperform broader indices YTD. The iShares Semiconductor ETF SOXX is up 12.12%, as compared to the benchmark S&P 500 Index which is up 7.41% YTD.

The outperformance has been fueled by expectations of cyclical bottoming and positive earnings revisions.

Key Trends Driving Semiconductor Growth

“From an industry perspective, we expect semi industry revenue to improve 6-8% Y/Y in 2024 …following an 8-10% decline in CY23,” said Sur. Key trends that he sees driving this performance include:

  • Accelerated Compute and AI Demand: Sur highlights the ongoing trend of accelerated compute and AI demand. Industry bookings and an improving supply-demand balance support stand as catalysts here and are expected to persist into 2024/2025.
  • Auto and Industrial Recovery: Sur also pointed to signs of recovery in the auto and industrial segments, with this quarter likely marking the bottom of the cycle. He anticipates positive order trends and a more synchronized recovery across different end markets.
  • Memory Industry Upswing: Sur notes the memory industry’s positive momentum, driven by strong pricing and demand trends. Memory content gains from AI and accelerated compute deployments, along with supply disruptions, are expected to drive higher pricing.

Also Read: Taiwan Semi’s AI Boom and US Expansion Set to Drive Q1 Earnings Growth

Top Picks From The Semiconductor Space Ahead Of Q1 Earnings

  • Semiconductors: Sur highlights Broadcom Inc AVGO, Marvell Technology Inc MRVL, Micron Technology Inc MU, Analog Devices, Inc. ADI and Microchip Technology Inc MCHP as top picks in the semiconductor space.
  • Semiconductor Capital Equipment (Semicap): KLA Corp KLAC stands out as the top pick in semicap space. Sur sees near-term fundamentals beginning to improve for KLA and set to grow in the second half of the year.
  • Chip Design Software (EDA/IP): Sur recognized Synopsys Inc SNPS as a top pick in chip design software. The company should be driven by strengthening demand and strong growth prospects due to increasing chip design complexity and AI infrastructure build-out.

With accelerating demand trends, recovering auto and industrial segments, and a resurgence in the memory industry, the semiconductor sector presents compelling investment opportunities for those looking to capitalize on the ongoing tech-driven transformation.

Read Next: Ahead Of Chip Earnings, Analyst Turns More Bullish On Nvidia And These Semiconductor Stocks On Robust AI Demand

Photo: Shutterstock

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