Here’s What Made Needham Bullish On Nvidia, AMD Versus Others In Semiconductor Space

• Needham shifted its focus on NVIDIA Corp (NASDAQ: NVDA) and Advanced Micro Devices Inc (NASDAQ: AMD).

• The stocks exhibited strong secular trends and more muted cyclical exposure, with more attractive valuations amid slowing consumer demand and supply constraints.

• Needham noted NVIDIA has multiple secular drivers to help buffer them against near-term cycle dynamics.

• Needham specifed five distinct product cycles over the next year: Hopper, software, gaming, auto, and Grace.

• In the near term, its supply chain checks indicate that demand from NVDA continues to be strong, with the company prioritizing mix toward higher-value server and datacenter platforms, with PC/graphics a lower priority amid ongoing tight supply conditions.

• As noted in Needham’s Asia supply chain report, the supply chain is expecting a 40-series GeForce platform launch in the fall.

• AMD’s recent concern has been client PC industry demand.

• Needham has strong confidence regarding AMD’s share gains in the data center space, both in the enterprise and the cloud market.

• Further, Genoa could widen the gap between AMD and Intel Corp (NASDAQ: INTC).

• Qualcomm Inc (NASDAQ: QCOM) saw bleaker June quarter revenue q/q due to the absence of product launches, while September revenue would be up strongly q/q driven by a resumption of product launches.

• Checks on iPhones suggest demand has been stable.

• QCOM appears to be more insulated from China’s smartphone weakness due to its Apple Inc (NASDAQ: AAPL) iPhone exposure, with the supply chain expecting their QCOM business to be up q/q in 2Q.

• While there has been some investor concern regarding a decline in mmWave content in iPhone 14, Needham’s checks have also suggested stable mmWave content on iPhone 14.

• QCOM’s non-handset catalysts, the first of which is notebook content, will be more robust in CY23.

• Needham has a Strong Buy rating on NVDA and QCOM with Outperform rating on AMD.

• Price Action: NVDA shares traded higher by 0.07% at $212.73 on the last check Monday.

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