By Sam Boughedda
Raymond James resumed coverage on semiconductor stocks on Thursday, with NVIDIA (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD) at Strong Buy, Marvell Technology (NASDAQ:MRVL), Micron Technology (NASDAQ:MU), Qorvo (NASDAQ:QRVO), and Intel (NASDAQ:INTC) at Outperform, and Broadcom (NASDAQ:AVGO), Qualcomm (NASDAQ:QCOM), and Skyworks Solutions (NASDAQ:SWKS) at Market Perform.
In addition, Raymond James analysts initiated coverage of Western Digital (NASDAQ:WDC) at Outperform.
"Nearly 85% of SOX index components saw an average 30% estimate cut during the past 6 months, suggesting the worst is now behind most semi stocks," stated analysts.
The year-to-date rally in SOX "makes sense," say analysts, but also "raises questions about how much more outperformance is left."
"Easing inflationary pressures, China re-opening, and secular trends such as artificial intelligence (AI)/machine learning (ML), advanced driver assistance systems (ADAS), and electric vehicle (EV) adoption make us optimistic about a 2H recovery," analysts added.
"While valuations look a bit stretched, we expect upward estimate revisions to start in 2H23 as inventories normalize, setting the stage for continued outperformance."