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Trending Sector
Global Semiconductor Stocks
3 “chip” bargains emerge amid market correction
Key US Indices – Performance & consensus 12-mth forward valuations
Indices | EPS Growth (%) | 12-mth Fwd. PE | Price performance | ||
7-Aug | 30-Jun | YTD | 1H24 | ||
S&P 500 (SPX) | 10.23 | 20.81 | 21.57 | 9.9% | 14.5% |
Nasdaq 100 (NDX) | 13.88 | 25.61 | 27.52 | 7.4% | 17.0% |
Semiconductor (SOX) | 13.99 | 26.63 | 33.03 | 9.4% | 31.1% |
Source: Bloomberg, DBS. Data as of 7th August
Stock | Drawdown from July’s high | YTD price return | EPS (%, y/y) | Revenue (%, y/y) | % of US revenue | ||
Current FY | FY +1 | Current FY | FY +1 | ||||
Intel | -43.1% | -60.5% | (74.28) | 334.16 | (3.51) | 7.89 | 26% |
Micron | -35.0% | 4.3% | 126.19 | 771.91 | 61.56 | 54.81 | 50% |
Lam Research | -31.7% | -1.7% | 17.97 | 28.85 | 16.67 | 18.85 | 10% |
Tokyo Electron | -30.4% | 4.9% | 31.84 | 31.67 | 22.60 | 18.74 | 9% |
AMD | -29.2% | -11.7% | 25.08 | 60.97 | 12.97 | 28.00 | 35% |
Applied Materials | -28.1% | 13.1% | 4.19 | 15.26 | 1.64 | 11.15 | 15% |
Teradyne | -27.4% | 9.0% | 4.08 | 54.85 | 4.33 | 23.37 | 16% |
GlobalFoundries | -26.0% | -28.7% | (37.52) | 35.15 | (9.42) | 11.86 | 58% |
Qualcomm | -24.3% | 9.7% | 19.26 | 9.72 | 7.72 | 8.16 | 4% |
Marvell | -23.0% | -3.5% | (7.53) | 74.70 | (2.27) | 32.86 | 14% |
NVIDIA | -22.7% | 110.5% | 109.77 | 40.54 | 98.10 | 40.33 | 44% |
SOX Index | -22.6% | 9.4% |
| ||||
ASML | -22.2% | 14.4% | (5.45) | 64.88 | 0.31 | 34.50 | 11% |
KLA Corp | -19.7% | 23.2% | 26.07 | 13.89 | 17.03 | 10.49 | 11% |
TSMC | -18.7% | 49.4% | 30.09 | 27.48 | 29.96 | 23.80 | 65% |
Broadcom | -17.6% | 28.9% | 13.52 | 27.45 | 43.61 | 16.74 | 19% |
Analog Devices | -15.8% | 3.2% | (37.77) | 28.08 | (24.22) | 14.00 | 34% |
Texas Instrument | -9.5% | 9.7% | (27.95) | 29.34 | (10.06) | 15.09 | 33% |
Source: Bloomberg, VisibleAlpha, DBS. Data as of 7th August
- We believe the current market correction presents an opportunity to accumulate selected global semiconductor stocks under our coverage
- Technology was the key underperformer; a larger magnitude of decline was noted in tech-heavy indices, which have pared YTD returns to trail behind the S&P500 Index
- Recent share price correction has also brought valuations to more attractive levels, coupled with solid earnings growth outlook
- Relative share price underperformances of Micron, Lam Research and Tokyo Electron may be unwarranted, as their potential to deliver revenue/earnings remains intact
- Robust growth expectations that are largely underpinned by organic recovery – over lofty AI ambitions – should feature better amid investors’ growing scrutiny on AI-monetisation
- Beyond AI, the recovery in the wider semiconductor industry is still unfolding this and into next year; Gartner expects global semiconductor revenues to grow by 19.2%/16.7% in 2024/25
- This corroborates with our view for memory and equipment makers to lead during upcycles
- Though not our economists’ base case, a hard landing scenario in the US could weigh on stocks with higher US revenue exposure such as TSMC, Global Foundries and NVIDIA.
- NVIDIA would be a casualty of slowing AI spend/CAPEX, especially amongst the US Big-3 cloud players (i.e., Google, Microsoft, Amazon)
TSMC, which counts leading US companies like NVIDIA, Apple, Qualcomm as key customers, may suffer if end-demand (i.e., PC, mobiles) recovery turns out to be less firm than expected- Global Foundries has exposure to the automotive and smart phone markets, even though contracts with Qualcomm and Infineon may still underpin growth prospects
Stocks to Watch
Cromwell European REIT – TP (-), Earnings (-)
- Excluding divestments, same-store NPI rose by 2.3% y/y in 1H24; 2Q24 DPU was 3.505Ects, with 1H24 DPU of 7.06Ects forming 47% of our full-year estimate
- All-in borrowing costs improved marginally q/q on ECB rate cuts while gearing was stable
- Portfolio valuations has remained steady over the past six months, and could improve with potential rate cuts
- Revised forecasts to factor in divestments and longer term interest rates; maintain BUY with lower TP of EUR1.90
IREIT Global – TP (-), Earnings (-)
- Improved earnings driven by backfilling at Darmstadt Campus and additional income from B&M portfolio
- Berlin Campus to undergo a redevelopment project that will enable the asset to double rent
- Repositioning of Berlin Campus to be an earnings boost once completed; awaiting further details
- Maintain HOLD with a lower TP of SGD0.33, mainly due to the absence of income from Berlin Campus
Starhill Global REIT – Earnings (-)
Pencilling in stronger retail reversions
- FY23/24 rev rose 1% y/y to SGD190mn; DPU down 4% y/y to 3.63 scts on higher debt and forex, slightly behind estimates
- SG assets best performer with full revenue growth of 3% y/y and strong reversions; overseas income continues but hit by forex translation
- Portfolio valuation flat y/y on stronger SG rents to neutralise cap rate expansion for AU properties (25-50 bps)
- Maintain BUY with TP of SGD0.68
Legend
| (+) | (-) |
Earnings | Positive earnings revision | Negative earnings revision |
Recommendation | Upgrade | Downgrade |
TP | Increase | Decrease |
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Related Insights
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- DBS Stock Pulse: Singapore yield plays - Turning maturing T-bills into bigger dividends29 Aug 2025
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Related Insights
- DBS Stock Pulse: Yangzijiang - Scope for a rise towards SGD3.15 with sizeable USD0.92bn contract win01 Sep 2025
- DBS Stock Pulse: Singapore yield plays - Turning maturing T-bills into bigger dividends29 Aug 2025
- DBS Stock Pulse: Global Technology - Nvidia’s 2QFY26 results spotlight 3 sectors28 Aug 2025