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Benzinga
Benzinga
Business
Anusuya Lahiri

Here's What Made Needham Bullish On Nvidia, AMD Versus Others In Semiconductor Space

  • Needham shifted its focus on NVIDIA Corp (NASDAQ:NVDA) and Advanced Micro Devices Inc (NASDAQ:AMD).
  • The stocks exhibited strong secular trends and more muted cyclical exposure, with more attractive valuations amid slowing consumer demand and supply constraints.
  • Needham noted NVIDIA has multiple secular drivers to help buffer them against near-term cycle dynamics. 
  • Needham specifed five distinct product cycles over the next year: Hopper, software, gaming, auto, and Grace. 
  • In the near term, its supply chain checks indicate that demand from NVDA continues to be strong, with the company prioritizing mix toward higher-value server and datacenter platforms, with PC/graphics a lower priority amid ongoing tight supply conditions. 
  • As noted in Needham's Asia supply chain report, the supply chain is expecting a 40-series GeForce platform launch in the fall.
  • AMD's recent concern has been client PC industry demand.
  • Needham has strong confidence regarding AMD's share gains in the data center space, both in the enterprise and the cloud market. 
  • Further, Genoa could widen the gap between AMD and Intel Corp (NASDAQ:INTC).
  • Qualcomm Inc (NASDAQ:QCOM) saw bleaker June quarter revenue q/q due to the absence of product launches, while September revenue would be up strongly q/q driven by a resumption of product launches. 
  • Checks on iPhones suggest demand has been stable.
  • QCOM appears to be more insulated from China's smartphone weakness due to its Apple Inc (NASDAQ:AAPL) iPhone exposure, with the supply chain expecting their QCOM business to be up q/q in 2Q. 
  • While there has been some investor concern regarding a decline in mmWave content in iPhone 14, Needham's checks have also suggested stable mmWave content on iPhone 14. 
  • QCOM's non-handset catalysts, the first of which is notebook content, will be more robust in CY23.
  • Needham has a Strong Buy rating on NVDA and QCOM with Outperform rating on AMD.
  • Price Action: NVDA shares traded higher by 0.07% at $212.73 on the last check Monday.
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