Wrapping up Q2 earnings, we look at the numbers and key takeaways for the semiconductor manufacturing stocks, including Photronics (NASDAQ:PLAB) and its peers.

The semiconductor industry is driven by demand for advanced electronic products like smartphones, PCs, servers, and data storage. The need for technologies like artificial intelligence, 5G networks, and smart cars is also creating the next wave of growth for the industry. Keeping up with this dynamism requires new tools that can design, fabricate, and test chips at ever smaller sizes and more complex architectures, creating a dire need for semiconductor capital manufacturing equipment.

The 14 semiconductor manufacturing stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 1.9% while next quarter’s revenue guidance was 2.7% below.

Inflation progressed towards the Fed's 2% goal recently, leading the Fed to reduce its policy rate by 50bps (half a percent or 0.5%) in September 2024. This is the first cut in four years. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be debating whether this rate cut's timing (and more potential ones in 2024 and 2025) is ideal for supporting the economy or a bit too late for a macro that has already cooled too much.

While some semiconductor manufacturing stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 3% since the latest earnings results.

Photronics (NASDAQ:PLAB)

Sporting a global footprint of facilities, Photronics (NASDAQ:PLAB) is a manufacturer of photomasks, templates used to transfer patterns onto semiconductor wafers.

Photronics reported revenues of $211 million, down 5.9% year on year. This print fell short of analysts’ expectations by 6.2%. Overall, it was a softer quarter for the company with underwhelming revenue guidance for the next quarter and a miss of analysts’ EPS estimates.

“Market softness in some segments during the quarter impacted photomask demand, reducing both IC and FPD revenue,” said Frank Lee, chief executive officer.

Photronics delivered the weakest performance against analyst estimates of the whole group. Unsurprisingly, the stock is down 2.8% since reporting and currently trades at $23.37.

Read our full report on Photronics here, it’s free.

Best Q2: Nova (NASDAQ:NVMI)

Headquartered in Israel, Nova (NASDAQ:NVMI) is a provider of quality control systems used in semiconductor manufacturing.

Nova reported revenues of $156.9 million, up 27.8% year on year, outperforming analysts’ expectations by 5.9%. The business had an exceptional quarter with an impressive beat of analysts’ EPS estimates and a significant improvement in its operating margin.

Nova achieved the fastest revenue growth among its peers. The market seems happy with the results as the stock is up 10.5% since reporting. It currently trades at $200.39.

Is now the time to buy Nova? Access our full analysis of the earnings results here, it’s free.

IPG Photonics (NASDAQ:IPGP)

Both a designer and manufacturer of its products, IPG Photonics (NASDAQ:IPGP) is a provider of high-performance fiber lasers used for cutting, welding, and processing raw materials.

IPG Photonics reported revenues of $257.6 million, down 24.2% year on year, in line with analysts’ expectations. It was a slower quarter as it posted underwhelming revenue guidance for the next quarter.

IPG Photonics delivered the slowest revenue growth in the group. As expected, the stock is down 20% since the results and currently trades at $70.10.

Read our full analysis of IPG Photonics’s results here.

FormFactor (NASDAQ:FORM)

With customers across the foundry and fabless markets, FormFactor (NASDAQ:FORM) is a US-based provider of test and measurement technologies for semiconductors.

FormFactor reported revenues of $197.5 million, up 26.7% year on year. This result beat analysts’ expectations by 1.3%. Overall, it was an exceptional quarter as it also put up a significant improvement in its gross margin and an impressive beat of analysts’ EPS estimates.

The stock is down 18% since reporting and currently trades at $43.95.

Read our full, actionable report on FormFactor here, it’s free.

Kulicke and Soffa (NASDAQ:KLIC)

Headquartered in Singapore, Kulicke & Soffa (NASDAQ: KLIC) is a provider of production equipment and tools used to assemble semiconductor devices

Kulicke and Soffa reported revenues of $181.7 million, down 4.9% year on year. This print met analysts’ expectations. More broadly, it was a softer quarter with underwhelming revenue guidance for the next quarter.

The stock is up 4.7% since reporting and currently trades at $41.56.

Read our full, actionable report on Kulicke and Soffa here, it’s free.

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