STMicroelectronics Plunges 51% YTD: Time to Hold or Fold the Stock?

With India positioning itself as a significant player in the global semiconductor landscape, Advanced Micro Devices Inc is doubling its investments.

The chipmaking giant views India as a burgeoning market and an essential development hub for innovation and technology growth.

Speaking to CNBC, AMD CEO Lisa Su highlighted India’s strategic importance, calling it integral to the company’s global operations. The Bengaluru design center, AMD’s largest R&D facility outside the U.S., employs over 8,000 people. It also plays a crucial role in hardware, software, and systems development.

AMD has pledged $400 million in investments in India through 2028. The goal is to bolster its infrastructure and foster a comprehensive semiconductor ecosystem.

Su told the Economic Times that AMD is collaborating with the Indian government to develop two supercomputers focused on weather forecasting. She described these projects as examples of the suitable investments being made in the country.

Additionally, Su highlighted the potential of artificial intelligence (AI) as the most transformative technology in five decades, with AMD’s products aiming to make AI more efficient and accessible over time.

Su emphasized that India plays a pivotal role in AMD’s global portfolio. Every product line passes through the country’s design center. These initiatives align with India’s ambitions to become a leader in semiconductor manufacturing and artificial intelligence.

Establishing such ecosystems requires time, Su says. She’s also optimistic about India’s progress, pointing to its success in attracting global investments and developing critical infrastructure.

AMD plans to cut around 1,000 jobs, accounting for 4% of its global workforce, as part of its resource realignment strategy.

The chip designer aims to sharpen its focus on competing with Nvidia Corp .

The chipmaker has been heavily investing in developing AI chips, which are highly sought after by significant hyperscalers such as Microsoft Corp . These high-performance chips come with a substantial price tag and are crucial in expanding AMD’s presence in the AI market.

Price Action: AMD stock is up 1.85% at $140.91 premarket at last check Monday.

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Value Score

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Stock to Watch: Nvidia (NVDA)

NVIDIA Corporation is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit, or GPU. Over the years, the company’s focus has evolved from PC graphics to artificial intelligence (AI) based solutions that now support high performance computing (HPC), gaming and virtual reality (VR) platforms.

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With a solid Zacks Rank and top-tier Growth and VGM Style Scores, NVDA should be on investors' short list.

Zacks Investment Research

Have you evaluated the performance of Nvidia's (NVDA) international operations for the quarter ending October 2024? Given the extensive global presence of this maker of graphics chips for gaming and artificial intelligence, analyzing the patterns in international revenues is crucial for understanding its financial strength and potential for growth.

The global economy today is deeply interlinked, making a company's engagement with international markets a critical factor in determining its financial success and growth path. It has become essential for investors to comprehend how much a company relies on these foreign markets, as this understanding reveals the firm's potential for consistent earnings, its capacity to harness different economic cycles, and its overall growth prospects.

International market involvement serves as insurance against economic downturns at home and enables engagement with economies that are growing more quickly. Still, this move toward diversification is not without its challenges, as it involves navigating through the fluctuations of currencies, geopolitical threats, and the distinctive nature of various markets.

Upon examining NVDA's recent quarterly performance, we noticed several interesting patterns in the revenue generated from its international segments, which are commonly analyzed and observed by Wall Street experts.

For the quarter, the company's total revenue amounted to $35.08 billion, experiencing an increase of 93.6% year over year. Next, we'll explore the breakdown of NVDA's international revenue to understand the importance of its overseas business operations.

Trends in NVDA's Revenue from International Markets

China (including Hong Kong) accounted for 15.44% of the company's total revenue during the quarter, translating to $5.42 billion. Revenues from this region represented a surprise of +48.4%, with Wall Street analysts collectively expecting $3.65 billion. When compared to the preceding quarter and the same quarter in the previous year, China (including Hong Kong) contributed $3.67 billion (12.21%) and $4.03 billion (22.24%) to the total revenue, respectively.

Taiwan generated $5.15 billion in revenues for the company in the last quarter, constituting 14.69% of the total. This represented a surprise of -20.79% compared to the $6.51 billion projected by Wall Street analysts. Comparatively, in the previous quarter, Taiwan accounted for $5.74 billion (19.11%), and in the year-ago quarter, it contributed $4.33 billion (23.91%) to the total revenue.

Prospective Revenues in International Markets

It is projected by analysts on Wall Street that Nvidia will post revenues of $37.74 billion for the ongoing fiscal quarter, an increase of 70.8% from the year-ago quarter. The expected contributions from China (including Hong Kong) and Taiwan to this revenue are 10.9% and 16.6%, translating into $4.11 billion and $6.26 billion, respectively.

For the entire year, the company's total revenue is forecasted to be $127.67 billion, which is an improvement of 109.6% from the previous year. The revenue contributions from different regions are expected as follows: China (including Hong Kong) will contribute 10.9% ($13.91 billion) and Taiwan 17.9% ($22.88 billion) to the total revenue.

Closing Remarks

Relying on global markets for revenues presents both prospects and challenges for Nvidia. Therefore, scrutinizing its international revenue trends is key to effectively forecasting the company's future outlook.

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Nvidia, bearing a Zacks Rank #2 (Buy), is expected to outperform the broader market's movements in the near term. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here

Exploring Recent Trends in Nvidia's Stock Price

Over the past month, the stock has gained 0.3% versus the Zacks S&P 500 composite's 2.1% increase. The Zacks Computer and Technology sector, of which Nvidia is a part, has risen 0.3% over the same period. The company's shares have increased 18.9% over the past three months compared to the S&P 500's 7.4% increase. Over the same period, the sector has risen 5.1%.

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