AMD, Nvidia lead chips weaker even as Applied Materials gives bullish forecast
PhonlamaiPhoto


Advanced Micro Devices (NASDAQ:AMD) and Nvidia (NASDAQ:NVDA) led the semiconductor industry lower on Friday, each declining more than 5%, despite the fact chip equipment maker Applied Materials (NASDAQ:AMAT) gave a bullish outlook for the next quarter.
On Thursday, Applied Materials (AMAT) said that it expects fourth-quarter earnings to be between $1.82 and $2.18 per share, with the mid-point of $2 above the $1.94 analysts were anticipating. Fourth-quarter sales are expected to be between $6.25B and $7.05B.
However, a number of Wall Street analysts noted that there may be some softening in the memory market in 2023, along with weakness in areas, prompting them to cut their price targets.
Cowen analyst Krish Sanker lowered his target to $140 from $160, noting that although wafer fab equipment spending is expected to be in the mid-$90B range in 2022, there should be a softening in memory next year, along with "pockets of weakness" in inductively-coupled argon-plasma spectrometry, but that could be offset by "continued foundry/logic strength."
Needham analyst N. Quinn Bolton also trimmed his price target on Applied Materials (AMAT), going to $125 from $130, noting that the company expects to continue to see supply chain improvements and it is expecting sequential growth through the second-quarter of 2023. Its backlog is also increasing even as some customers reschedule and cancel, showing the fact the company "is positioned for share gains."
Despite the strong results, Applied Materials (AMAT) shares fell more than 3.5% to $104.24 in mid-day trading.
Micron Technology (MU) shares fell nearly 4% in mid-day trading on back of the comments surrounding the weakness in the memory market. 
Conversely, Samsung (OTCPK:SSNLF) said on Friday that it had started building a new semiconductor research and development complex with the intent to invest up to $15B by 2028 "to extend its leadership in state-of-the-art semiconductor technology."
Samsung (OTCPK:SSNLF) noted that the new facility would focus on next-generation devices, as well as processes for memory and system semiconductors.
Several other semiconductors also declined to end the week, including Intel (INTC), Qualcomm (QCOM), Broadcom (AVGO) and Texas Instruments (TXN), all of which fell 1.5% or more.

In late July, Morgan Stanley cut 2023 earnings estimates on chip equipment makers, including Applied Materials (AMAT), over worries of cuts to semiconductor equipment spending.