Earnings results often indicate what direction a company will take in the months ahead. With Q3 behind us, let’s have a look at Allegro MicroSystems (NASDAQ:ALGM) and its peers.

The biggest demand drivers for processors (CPUs) and graphics chips at the moment are secular trends related to 5G and Internet of Things, autonomous driving, and high performance computing in the data center space, specifically around AI and machine learning. Like all semiconductor companies, digital chip makers exhibit a degree of cyclicality, driven by supply and demand imbalances and exposure to PC and Smartphone product cycles.

The 9 processors and graphics chips stocks we track reported a mixed Q3. As a group, revenues beat analysts’ consensus estimates by 1.1% while next quarter’s revenue guidance was 4.4% below.

In light of this news, share prices of the companies have held steady as they are up 2.6% on average since the latest earnings results.

Allegro MicroSystems (NASDAQ:ALGM)

The result of a spinoff from Sanken in Japan, Allegro MicroSystems (NASDAQ:ALGM) is a designer of power management chips and distance sensors used in electric vehicles and data centers.

Allegro MicroSystems reported revenues of $187.4 million, down 32% year on year. This print was in line with analysts’ expectations, but overall, it was a slower quarter for the company with revenue guidance for next quarter missing analysts’ expectations and a significant miss of analysts’ EPS estimates.

“We delivered results in-line with our commitments. Second quarter sales were $187 million, with sequential growth in both Automotive and Industrial and Other end markets. Non-GAAP EPS was $0.08, at the high end of our outlook,” said Vineet Nargolwala, President and CEO of Allegro.

Interestingly, the stock is up 13.9% since reporting and currently trades at $25.30.

Read our full report on Allegro MicroSystems here, it’s free.

Best Q3: Nvidia (NASDAQ:NVDA)

Founded in 1993 by Jensen Huang and two former Sun Microsystems engineers, Nvidia (NASDAQ:NVDA) is a leading fabless designer of chips used in gaming, PCs, data centers, automotive, and a variety of end markets.

Nvidia reported revenues of $35.08 billion, up 93.6% year on year, outperforming analysts’ expectations by 5.9%. The business had an exceptional quarter with a solid beat of analysts’ EPS estimates and an impressive beat of analysts’ adjusted operating income estimates.

Nvidia delivered the biggest analyst estimates beat and fastest revenue growth among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 1.3% since reporting. It currently trades at $144.

Is now the time to buy Nvidia? Access our full analysis of the earnings results here, it’s free.

Weakest Q3: SMART (NASDAQ:SGH)

Based in the US, SMART Global Holdings (NASDAQ:SGH) is a diversified semiconductor company offering memory, digital, and LED products.

SMART reported revenues of $311.1 million, down 1.7% year on year, falling short of analysts’ expectations by 4.3%. It was a disappointing quarter as it posted a significant miss of analysts’ adjusted operating income and EPS estimates.

SMART delivered the weakest performance against analyst estimates in the group. The stock is flat since the results and currently trades at $21.

Read our full analysis of SMART’s results here.

AMD (NASDAQ:AMD)

Founded in 1969 by a group of former Fairchild semiconductor executives led by Jerry Sanders, Advanced Micro Devices (NASDAQ:AMD) is one of the leading designers of computer processors and graphics chips used in PCs and data centers.

AMD reported revenues of $6.82 billion, up 17.6% year on year. This print topped analysts’ expectations by 1.6%. More broadly, it was a mixed quarter as it also logged a significant improvement in its inventory levels but revenue guidance for next quarter slightly missing analysts’ expectations.

The stock is down 25.6% since reporting and currently trades at $123.63.

Read our full, actionable report on AMD here, it’s free.

Qorvo (NASDAQ:QRVO)

Formed by the merger of TriQuint and RF Micro Devices, Qorvo (NASDAQ: QRVO) is a designer and manufacturer of RF chips used in almost all smartphones globally, along with a variety of chips used in networking equipment and infrastructure.

Qorvo reported revenues of $1.05 billion, down 5.2% year on year. This number surpassed analysts’ expectations by 1.8%. Taking a step back, it was a satisfactory quarter as it also recorded an impressive beat of analysts’ adjusted operating income estimates but revenue guidance for next quarter missing analysts’ expectations significantly.

The stock is down 12.1% since reporting and currently trades at $88.40.

Read our full, actionable report on Qorvo here, it’s free.

Market Update

Thanks to the Fed's series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% each in November and December), and a notable surge followed Donald Trump's presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by the pace and magnitude of future rate cuts as well as potential changes in trade policy and corporate taxes once the Trump administration takes over. The path forward is marked by uncertainty.

Want to invest in winners with rock-solid fundamentals? Check out our Strong Momentum Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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