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As Nvidia prepares to release its long-awaited full-year results this Wednesday, JPMorgan analysts say VAT Group, ASML Holding, and ASM International are all poised to benefit from an upturn in the microchip market. The company says it offers the best prospects for investors looking to invest.
JPMorgan analysts led by Sandeep Deshpande say that while the downturn in the microchip market is now showing signs of improving, certain segments of the market, including those that supply chips to the automotive and industrial sectors, are He explained that improvement has been slower than in the segment.
Meanwhile, the memory chip market is showing signs of significant recovery, with inventory levels for microchips used in computer storage devices currently below seasonal average levels, it said in a note to clients on Monday. .
As such, Europe-based semiconductor companies with the highest exposure to the memory chip market and the least exposure to the automotive and industrial sectors will reap the most benefits in the short term, Deshpande and team said. .
Swiss Business VAT Group
VACN
makes vacuum valves used in chip manufacturing, and the Dutch company ASML Holding
ASML
ASML
and ASM International
ASM
Both manufacture lithography equipment used in semiconductor manufacturing.
Share prices for all three European companies have increased significantly over the past 12 months, with VAT up 51%, ASML up 43% and ASM up 81%.
Notably, all three European companies are focused on manufacturing equipment used to make advanced microchips used in electronic products such as smartphones and computers. In JPMorgan’s view, this puts the company in a good position to benefit from the economic recovery.
It also includes companies most closely associated with the automotive and high-tech industries, such as Germany’s Infineon Technologies AG.
IFX
and STMicroelectronics of Switzerland
STM
,
They warn that the market remains challenging and that already cheap stocks will continue to trade at subdued levels.
Deshpande and his research team found that inventory levels for chips used in the automotive and industrial sectors are currently 38.7% higher than the three-year seasonal average in the fourth quarter of 2023, worsening from 31.1% in the third quarter. He pointed out that he was doing it. Quarter of 2023.
In contrast, memory chip inventory levels improved significantly in the last three months of 2023, from a rate 19% above the seasonal average in the third quarter to above normal seasonal levels at the end of last year’s fourth quarter. The rate has fallen to 1.7%.
For reference, ASML Holding was separated from ASM International in 1984 through a joint venture with Philips.
Fear
,
is currently the world’s only manufacturer of extreme ultraviolet lithography equipment used to manufacture advanced chips used in the AI industry.
ASM International continues to design wafer processing machinery used in microchip manufacturing. VAT Group manufactures the vacuum valves needed to manufacture high-tech chips in a sterile environment to avoid exposure to external particles.
Nvidia
NVDA
,
The world’s largest chip design company will report quarterly results on Wednesday, but investors will be looking for important clues about the health of the global chip market as excitement builds over the potential for an AI-driven boom. It seems likely that all eyes will be on this financial results.
read: Regardless of the outcome, Nvidia’s earnings report could cancel out the momentum rising in U.S. stocks.
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