Stock rallies continue to thrive in the semiconductor sector, with tonight's events promising an additional dose of excitement.
It's full steam ahead for the earnings season, particularly in the tech sector. Stock prices are soaring, and investors are keeping a close eye on tech stocks. A stellar performance from STMicroelectronics has raised eyebrows in the semiconductor sector. The stock surged by nearly eight percent in European trading. Competitors like Infineon and Applied Materials also saw gains, with the former rising almost three percent and the latter up nearly four percent.
Fourth Quarter Triumph
STMicroelectronics reported a whopping profit of $1.25 billion in the fourth quarter. Earnings per share climbed from $0.82 to an impressive $1.32. Analysts had expected an average of $1.13 per share, highlighting the company's outperformance.
A Promising Future
CEO Jean-Marc Chery forecasts revenue between $16.8 billion and $17.8 billion for 2023. This represents a potential increase of between four and over ten percent. The experts tracked by Bloomberg had only predicted a marginal increase after the significant revenue boost last year, making this forecast well above expectations.
Intel will release its earnings report today after the close of the US market, with Wall Street foreseeing an average earnings of $0.20 per share and revenue of $14.49 billion for the last quarter. Meanwhile, German chipmaker Infineon will present its quarterly report on Thursday.
Indicative Index Gains
All the companies mentioned are components of the 15-value BÖRSE Online Chip Power Index. This index has increased by nearly 15 percent since the start of the year. The index certificate WKN DA0ABM allows investors to participate nearly 1:1 in the index's development. The high demand for chips in the e-mobility sector is expected to be positive for the long-term growth of the index.
Supplementary Insights
In the market for thin wafer, where Applied Materials supplies equipment to key players like Shin-Etsu and SUMCO, growth is projected at a 12.5% CAGR through 2027[2]. Infineon reported a 1.35 billion euro decline in revenue for 2024[3], potentially signaling pressure on margins or softness in specific end markets. STMicroelectronics competes in the smart card IC market, which has a 6.3% CAGR through 2027[2]. Geopolitical risks, such as tariff-related vulnerabilities affecting 60% of PCs and smartphones imported from China[4], and advancements in materials, like silicon photonics, could impact the industry[2][4].
- For 2023, STMicroelectronics CEO Jean-Marc Chery forecasts revenue between $16.8 billion and $17.8 billion, representing a potential increase of between four and over ten percent.
- During the fourth quarter of 2022, STMicroelectronics reported a profit of $1.25 billion, with earnings per share climbing from $0.82 to an impressive $1.32.
- STMicroelectronics' stock surged by nearly eight percent in European trading, prompting interest from investors due to its outperformance compared to analyst expectations.
- The BÖRSE Online Chip Power Index, including all the companies mentioned, has increased by nearly 15 percent since the start of the year, making it an attractive investment opportunity for those interested in the technology sector, particularly finance, in the coming earnings season.
