AMD leads chips lower as sector awaits results from Synopsys, Wolfspeed
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Semiconductor stocks were mixed in early trading on Wednesday as investors awaited results from Synopsys (NASDAQ:SNPS) and Wolfspeed (NYSE:WOLF).
AMD (NASDAQ:AMD) shares fell 2.4% as investors appeared to continue to prefer Nvidia (NASDAQ:NVDA) in the artificial intelligence race.
Several Wall Street firms continued to tout Nvidia (NVDA) heading into the company's fiscal second-quarter results, slated to be released on August 23.
Raymond James analyst Srini Pajjuri reiterated the firm's strong buy rating and boosted his estimates on Nvidia, noting that the firm believes demand for GPUs is "significantly" outpacing supply as the artificial intelligence spending boom continues.
In addition, Pajjuri noted that Taiwan Semiconductor (TSM) recently said that Chip-on-Wafer-on-Substrate supply, or CoWoS, is likely to remain tight through the end of 2024, which could extend the current demand, supply imbalance through the first half of next year.
Deutsche Bank analyst Ross Seymore said he is expecting another "stunning print [and] guide from the Jensen Huang-led company, but added that the company could be limited by supply for "several quarters."
Nvidia (NVDA) shares rose 0.4% in early trading.
Intel (INTC) shares fell 1.7% as the company officially terminated its merger with Israeli-based foundry Tower Semiconductor (TSEM).
"Our foundry efforts are critical to unlocking the full potential of IDM 2.0, and we continue to drive forward on all facets of our strategy," said Intel (INTC) CEO Pat Gelsinger. "We are executing well on our roadmap to regain transistor performance and power performance leadership by 2025."
Tower Semiconductor (TSEM) shares fell more than 8% and hit a new 52-week low earlier in the session.
Wolfspeed (WOLF) shares slipped 1.3% as investors awaited for the company to report fiscal fourth-quarter results.
William Blair analyst Jed Dorsheimer, who has an outperform rating on Wolfspeed (WOLF), said on Tuesday that this will be the first quarter for revenue booked from Mohawk Valley with investor concern on the ramp and cost structure.
"We estimate an inconsequential $3 million in revenue contribution this quarter, but it serves as a significant milestone for the company and the industry as the first SiC product from a 200 mm fab," Dorsheimer wrote in an investor note.
BMO Capital Markets analyst Ambrish Srivastava, who has a market perform rating and $55 price target on Wolfspeed (WOLF), said he expects the company to "sound a more positive tone" around progress made on manufacturing, especially with the company's financing progress.
A consensus of analysts estimate the company will lose 20 cents per share on $222.69M in revenue.
Synopsys (SNPS) shares dipped 0.7% as investors awaited fiscal third-quarter results, with hopes that the company may give additional information on the foundry deal with Intel.
Needham analyst Charles Shi said the deal will use Intel's (INTC) 7 and 18A nodes and that Intel is likely to pay Synopsys and other IP providers for IP development.
"Given Intel's ambition to grow its foundry business under the IDM 2.0 model, we think this agreement may be worth billions of dollars and add handsomely to SNPS' backlog," Shi wrote in an investor note.
A number of other semiconductor stocks were mixed on Wednesday, as Broadcom (AVGO) and Qualcomm (QCOM) saw modest gains, while Analog Devices (ADI), Micron Technology (MU) and Texas Instruments (TXN) were fractionally lower.

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