Goldman cuts semiconductor estimates on 'more challenging macro backdrop'
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Goldman Sachs slashed estimates for a number of semiconductor and semiconductor equipment stocks, noting a "more challenging macro backdrop" over the next 12 months.
A team of analysts, led by Toshiya Hari, downgraded Microchip Technology (NASDAQ:MCHP), Qorvo (NASDAQ:QRVO) and Teradyne (NASDAQ:TER) to neutral, while taking Advanced Micro Devices (AMD) off its U.S. Conviction Buy List.
However, it did upgrade KLA Corp (NASDAQ:KLAC) to buy, noting it could be a "potential outperformer."
"While we expect buyers of semiconductors to maintain their procurement plans in the near-term in fear of ongoing supply disruptions/shortages, and we remain bullish on the sector on a through-cycle basis, we believe it is prudent to assume at least a normalization in demand or a convergence toward long-term trends in 2023/2024 as inflation and rising interest rates adversely affect consumer spending and industrial production," the analysts wrote.
Conversely, Bank of America recently coined the phrase MANGO for a number of semiconductor companies that are likely to benefit from increased spending in areas like cloud, artificial intelligence, enterprise and telecom.
Microchip Technology (MCHP), Qorvo (QRVO) and Teradyne (TER) all fell more than 2% in premarket trading, while Advanced Micro Devices (AMD) fell slightly more than 0.5%. 
KLA Corp (KLAC) shares rose slightly less than 2% to $373.20 on back of the upgrade. 
The firm cautioned that none of the companies "are immune" to a slowdown in global GDP, but KLA Corp. (KLAC), along with Broadcom (AVGO), Marvell Technology (MRVL), On Semiconductor (ON), IMPINJ (PI) and Credo Technology Group Holding (CRDO) could all outperform the broader semiconductor industry, citing one or more factors.
These factors include a "relatively defensive-end market mix," an ability to raise prices, resilient margins and free cash flow, a number of steps to raise revenue growth or margins and "above-average" return of capital to shareholders in the forms of buybacks and dividends. 
Earlier this month, Bank of America said KLA Corp (KLAC) could be among the beneficiaries as the U.S. looks to expand the domestic semiconductor industry.