STM - Wolfspeed Applied Materials Marvell Analog Devices may have mixed results: MS

2023-08-14 14:54:51 ET

Wolfspeed ( NYSE: WOLF ), Applied Materials ( NASDAQ: AMAT ), Marvell Technology ( NASDAQ: MRVL ) and Analog Devices ( NASDAQ: ADI ) are all set to report quarterly results this month and Morgan Stanley is expecting a few different outlooks from the semiconductor quartet.

Regarding Wolfspeed ( WOLF ), analyst Joseph Moore, who has an equal-weight rating on the Durham, North Carolina-based company, said execution is still the company's top-priority as it has become a "show me" stock.

"Challenges in bringing up device revenues, as well as 200mm substrate capacity, and the subsequent delay in the ramp of the Mohawk Valley fab, as well as various adjustments to non-GAAP earnings (pro-formaing out Mohawk Valley start-up and under-utilization costs as well as changing depreciation terms), have shifted market perception of WOLF from a differentiated company with one of the strongest growth opportunities in the semiconductor space to one that continues to have long-term opportunities but is facing uncertainty around near-term execution," Moore wrote in an investor note.

Moore added that there is still "significant" long-term potential for Wolfspeed ( WOLF ), but recent mishaps, as well as increased competition in silicon carbide from companies like ON Semiconductor ( ON ) and STMicro ( STM ), have changed the narrative.

Wolfspeed ( WOLF ) is slated to report quarterly results on August 16 before the market opens and analysts expect the company to lose 49 cents per share on $913.03M in revenue.

Regarding Applied Materials ( AMAT ), which is slated to report on August 17 after the close of trading, Moore said he has been "surprised" by the company's resiliency the last few quarters.

"The strength in trailing edge logic has continued, driven by aggressive investment in older nodes in China, as well as re-shoring spending in other regions, and strength in new automotive processes (notably Silicon Carbide)," Moore wrote.

He added that overall memory spending is still soft, but there are some pockets of strength, including trailing edge dynamic random access memory in China and specialty packaging.

Analysts expect Applied Materials ( AMAT ) to earn $1.75 per share on $6.18B in revenue.

For Analog Devices ( ADI ), which reports before the market open on August 23, Moore is expecting a 10% year-over-year decline in the first-half of 2024, as the company continues to see weakness in its segments.

"Commentary has aligned with our latest distributor survey & quant analysis ... that indicated we are at the early stages of a down cycle, with earnings from MCHP and TXN aligning with our analysis," Moore wrote, referencing Microchip ( MCHP ) and Texas Instruments ( TXN ).

Moore said it's likely that Analog ( ADI ) deals with the downturn "relatively better" than the others due to the fact that 40% of its industrial business is in "relatively resilient" markets, such as aerospace, health care and sustainable energy, while its content gains in automotive are from the company's growth drivers.

Analysts expect Analog Devices ( ADI ) to earn $2.53 per share on $3.11B in revenue.

For Marvell ( MRVL ), Moore said last quarter "rekindled" the growth narrative due to the company's artificial intelligence exposure, but it's likely that other markets will keep numbers in-line.

We think that what the company is describing here seems realistic," Moore wrote. "This is what we are seeing essentially everywhere in data center infrastructure, that there is a shortage around AI applications while everything else is quite weak. So the company's sizing of optical, and the increased opportunity around custom AI silicon, seems realistic."

Analysts expect Marvell Technology ( MRVL ) to earn 32 cents per share on $1.33B in revenue.

More on Applied Materials

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• Lam Research And Applied Materials: Downgrading Semi-Caps To Hold
• Applied Materials: Excessive AI Hype Drives Semiconductor Stock Overvaluation

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