TXN - Semiconductors Winners And Losers Heading Into Q2 2024

2024-04-02 16:20:51 ET

Summary

• Q1 2024 has passed and several of the predictions made at the start of 2024 are starting to play out as anticipated going into Q2 2024.
• HPC plays have been winners thus far in 2024 and those exposed to the market for automotive chips are the laggards.
• Q1 2024 was mostly a continuation of Q4 2023, but the Fed and China seem to be prepping themselves in order to shake things up before 2024 is over.
• The best bet for the remainder of 2024 may not be the one that comes to mind first, but it may be the one with the best chance.

Semiconductor stocks are headed into Q2 2024 after the preceding Q1 2024 was in many ways a continuation of the Fed-induced rally that started in Q4 2023. The stock market hit record territory in Q1 2024, but semis were still able to outperform most sectors. Still, not all semis are doing well and some are doing much better than others. Why will be covered next.

The rally in semis continues

A previous article at the start of 2024 ended with several predictions as to how the year 2024 was likely to play out. The Federal Reserve, for instance, was singled out as the key swing factor for semis. In fact, Fed policy has demonstrated an ability to override all else. Recall how semis did much better in the latter part of 2022 than the early part of 2022, even though earnings/guidance/outlook were much better in early 2022 than in late 2022, and this coincided with the Fed switching from a very hawkish stance in early 2022 to a more dovish stance in late 2022....

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