- Needham shifted its focus on NVIDIA Corp (NASDAQ:NVDA) and Advanced Micro Devices Inc (NASDAQ:AMD).
- The stocks exhibited strong secular trends and more muted cyclical exposure, with more attractive valuations amid slowing consumer demand and supply constraints.
- Needham noted NVIDIA has multiple secular drivers to help buffer them against near-term cycle dynamics.
- Needham specifed five distinct product cycles over the next year: Hopper, software, gaming, auto, and Grace.
- In the near term, its supply chain checks indicate that demand from NVDA continues to be strong, with the company prioritizing mix toward higher-value server and datacenter platforms, with PC/graphics a lower priority amid ongoing tight supply conditions.
- As noted in Needham's Asia supply chain report, the supply chain is expecting a 40-series GeForce platform launch in the fall.
- AMD's recent concern has been client PC industry demand.
- Needham has strong confidence regarding AMD's share gains in the data center space, both in the enterprise and the cloud market.
- Further, Genoa could widen the gap between AMD and Intel Corp (NASDAQ:INTC).
- Qualcomm Inc (NASDAQ:QCOM) saw bleaker June quarter revenue q/q due to the absence of product launches, while September revenue would be up strongly q/q driven by a resumption of product launches.
- Checks on iPhones suggest demand has been stable.
- QCOM appears to be more insulated from China's smartphone weakness due to its Apple Inc (NASDAQ:AAPL) iPhone exposure, with the supply chain expecting their QCOM business to be up q/q in 2Q.
- While there has been some investor concern regarding a decline in mmWave content in iPhone 14, Needham's checks have also suggested stable mmWave content on iPhone 14.
- QCOM's non-handset catalysts, the first of which is notebook content, will be more robust in CY23.
- Needham has a Strong Buy rating on NVDA and QCOM with Outperform rating on AMD.
- Price Action: NVDA shares traded higher by 0.07% at $212.73 on the last check Monday.
