Report Analysis: Semiconductor Sector Surges 155%, Bernstein Says NVDA and AVGO Are 'Absurdly Cheap'
Title: Bernstein's Semiconductor Quarterly Review: AI is the "Only Game in Town," Highlights "Absurdly Cheap" NVDA and AVGO
Bernstein's June 23 semiconductor industry review asserts AI is the sector's dominant driver, fueling record gains. The SOX index rose 155.6% over the past year, primarily driven by a 75% increase in forward EPS, not just valuation expansion. While sector-wide valuations are high, Bernstein identifies a significant valuation gap. Despite leading the AI chip market, Nvidia (NVDA) and Broadcom (AVGO) have lagged in performance this year. Based on their 2027 EPS projections and critical roles in the AI supply chain, Bernstein rates both as "Outperform," calling their current valuations "absurdly cheap."
The report notes extreme divergence within the sector, with memory chips up 500% YTD, while GPUs/ASICs gained 115%. Bernstein upgraded AMD to "Outperform" due to its dual opportunity in both AI/GPU and CPU markets. However, it remains cautious on Qualcomm (QCOM), citing smartphone market pressures.
Key risks highlighted include historically high sector crowding and elevated inventory levels, which could pressure the supply chain if demand softens. The conclusion stresses selective stock-picking over broad directional bets, given current high valuations.
marsbit06/24 09:38
