- Wednesday, October 16, 2024
KeyBanc Capital Markets recently released its quarterly supply chain findings on the semiconductor industry, providing insights into the current state of the market. While the overall picture remains challenging, with China still experiencing weakness and muted demand across Asia, there are still a few companies that are outperforming in this soft environment.
According to analyst John Vinh, investors can take comfort in the fact that the situation is at least "not getting meaningfully worse." In fact, Vinh raised his revenue estimates for two companies: Nvidia (NVDA) and Intel (INTC), citing improving product demand.
Despite Nvidia's shares being down 2.1% in recent trading, Vinh believes the company is benefiting from the growing interest in generative AI. Additionally, Nvidia's focus on higher-end, more expensive H100 datacenter chips has positioned it well in the market. The demand for AI servers incorporating Nvidia's chips remains robust, making the company a dominant player in the rapidly growing workload sector. Vinh has given Nvidia an Overweight rating and raised his price target to $750 from $670.
Meanwhile, Intel, while not on the same level as Nvidia, still has areas of strength. With the latest server chip, Sapphire Rapids, starting to gain momentum in terms of volume, and PC demand holding steady, Vinh sees positive signs for the company. He has reaffirmed his Sector Weight rating on Intel and believes the stock's fair value is $35. However, he does not have an official price target for the stock.
In conclusion, KeyBanc Capital Markets' supply chain findings highlight winners and losers in the semiconductor industry. Despite challenges in the market, companies like Nvidia and Intel are demonstrating resilience and benefiting from improving product demand.
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