An Introduction
There are 5 steps in developing and producing computer chips – the semiconductor value chain – whose pure-play constituent stock performances are tracked in one of the 17 MunAiMarkets model portfolios. There are 5 pure-play companies in the “fabless” portfolio – the other 4 are foundries, equipment and materials suppliers; assembly/testing/packaging companies; and electronic design automation software designers – and they are analyzed in this article as to why they did so poorly, on average, in November and in the past 3 months.
What Is A Pure-Play “Fabless” Semiconductor Company?
A pure-play company concentrates its efforts on one single line of business. A fabless (fabrication-less) manufacturer designs and sells hardware devices and semiconductor chips while outsourcing their fabrication (or fab) to a specialized manufacturer.
The MunAiMarkets Pure-Play “Fabless” Semiconductor Companies Portfolio
Only 6 pure-play fabless semiconductor companies are trading on U.S. stock exchanges and they are outlined below as to their stock performances in November, in descending order, and in the last 3 months along with their current market capitalizations, and the reasons behind their stock weaknesses:
- Marvell (MRVL): UP 15.8% in November; UP 21.7% in Last 3 Months
- Market Capitalization: $80B
- Forward Price Earnings Ratio: 63.4
- Reasons for Price Change:
- Price Targets: Analysts set optimistic price targets for MRVL, with Loop Capital initiating coverage with a price target of $95 and Jefferies setting a target of $85.
- Market Performance: MRVL’s stock demonstrated positive momentum during the month and is now UP 54% YTD.
- Company Developments: Marvell continued to show strong financial health and profitability metrics, which reassured investors about its future prospects
- Nvidia (NVDA): UP 4.0% in November; UP 15.7% in Last 3 Months
- Market Capitalization: $3,390B
- Forward Price Earnings Ratio: 46.8
- Qualcomm (QCOM): DOWN 2.5% in November; DOWN 9.5% in Last 3 Months
- Market Capitalization: $176B
- Forward Price Earnings Ratio: 14.2
- Broadcom (AVGO): DOWN 4.5% in November; DOWN 0.5% in Last 3 Months
- Market Capitalization: $757B
- Forward Price Earnings Ratio: 33.4
- Advanced Micro (AMD): DOWN 4.9% in November; DOWN 7.8% in Last 3 Months
- Market Capitalization: $223B
- Forward Price Earnings Ratio: 41.2
- Monolithic Power (MPWR): DOWN 25.2% in November; DOWN 39.3% in Last 3 Months
- Market Capitalization: $28B
- Forward Price Earnings Ratio: 40.4
- Reasons for Price Change:
- Earnings Report Concerns: Although MPWR beat expectations for revenue and adjusted earnings per share in its Q3 earnings report, the company did not raise its guidance above expectations leading to investor concerns about future growth.
- Competition with NVIDIA: An Edgewater Research report suggested that MPWR’s allocation to Nvidia’s Blackwell line of GPUs are “at risk” as NVDA has canceled half of MPWR’s backlog, cutting all of their unconfirmed orders.
- High Valuation: MPWR’s stock was trading at over 100 times trailing earnings and 50 times forward earnings estimates going into the report, leaving little room for error.
Summary
The average pure-play fabless semiconductor company was DOWN 13.3% in November and is now DOWN 22.3% in the last 3 months but is still UP 9.8% YTD.
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