WOLF - Semiconductors rise as Wolfspeed surges 30% after strong results guidance

Semiconductor stocks rose on Thursday after Wolfspeed ( NYSE: WOLF ) surged nearly 30% after it reported fourth-quarter results and issued guidance that both topped expectations, prompting praise from the analyst community.

Citi analyst Amanda Scarnati noted that the company had a "significant ramp" in design ins of $2.6B in the quarter, resulting in management to note their 2026 revenue figures will be between 30% and 40% higher than the $2.6B figure they forecast in November 2021.

"The strength in the design wins and conversion to design wins should help to ease some investor concerns around the competitive environment," Scarnati wrote in a note to clients, while also alluding to comments made by the management team that the silicon carbide market is "growing significantly faster than expected."

Scarnati has a buy rating on Wolfspeed ( WOLF ) and raised her price target to $115 from $95 following the results.

Bank of America analyst Vivek said Wolfspeed ( WOLF ) is seeing increased competition, especially from ON Semiconductor ( ON ) and the company is growing spending and its ongoing cash burn could result in a possible "equity-linked event" sometime in the second half, but record design wins, backlog and non-auto related opportunities are positives.

"Autos represents 70%-75% of WOLF design-in activity, but we note growth vectors in infra/industrial (solar inverters, high-end medical equipment, EV charging stations) that can diversify WOLF’s revenue stream (2300+ non-auto design-ins in last three years)," Arya wrote in a note to clients.

Qualcomm ( NASDAQ: QCOM ) rose more than 2.5% after a report indicated the San Diego-based chipmaker is looking to reenter the server market after having left it in 2018.

The Cristiano Amon-led Qualcomm ( QCOM ) is looking for a number of customers for the new offering, including Amazon ( AMZN ) Web Services, which has agreed to take a look at the products, the news outlet noted, citing people familiar with the plans.

The San Diego-based Qualcomm ( QCOM ) purchased Nuvia in March 2021 for $1.4B and said at the time it expected to integrate Nuvia's products "across a wide portfolio of products," including smartphones, laptops, advanced driver assistance systems and infrastructure networking solutions.

Amazon ( AMZN ) currently uses chips from its AWS unit from Intel ( NASDAQ: INTC ), Advanced Micro Devices ( AMD ) and Nvidia ( NVDA ), but has been working on its own chips, having built its own line of Graviton processors.

Earlier this week, TF International Securities analyst Ming-Chi Kuo said the company's new Inferentia chip is set to be mass produced and shipped in the fourth quarter, which could increase the cloud computing giant's competitiveness and growth.

Intel ( INTC ) shares rose more than 1% to $36.22 even as China hit back at the U.S. CHIPS & Science Act, saying the new law violates fair market principles and goes after the country's efforts to build its own semiconductor industry.

“We resolutely oppose the US’ restrictive actions targeting certain countries,” Yu Xiekang, vice chairman of the China Semiconductor Industry Association, told onlookers at an industry conference in Nanjing, according to Bloomberg .

"It contains essentially discriminatory clauses in market competition and creates an unfair playing field, which goes against the WTO’s fair-trade principles."

Intel ( INTC ) is expected by some to be the biggest beneficiary of the CHIPS & Science Act.

The Biden administration is looking into whether it should restrict sales from semiconductor equipment makers such as ASML Holding ( ASML ) and others to Chinese semiconductor manufacturers.

Taiwan Semiconductor ( NYSE: TSM ) was also in the spotlight, gaining fractionally, even as the U.S. said it would start formal trade negotiations with Taiwan, a move that could potentially anger China.

Earlier this month, investment firm Morgan Stanley said Wolfspeed ( WOLF ) could have upside due to its strong market share in the silicon carbide market, a key area for electric vehicles.

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