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4 Semiconductor Stocks Poised to Beat Estimates This Earnings

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The overall earnings for the semiconductor industry this earnings season is expected to be better than the year-ago quarter. After a challenging period marked by economic headwinds and disruptions in the supply chain, semiconductor stocks appear to be on the brink of a significant comeback, fueled by a steady increase in sales.

The semiconductor market grappled with challenges arising from pandemic-induced disruptions in the supply chain and the Federal Reserve's stringent monetary policies, which subdued demand and led to a decline in sales. However, with the easing of inflationary pressures and a gradual recovery in demand, the industry has been on an upward trajectory since the second quarter of 2023.

The advent of generative AI has further attracted investments. The technology has already proven beneficial across a variety of industries, including marketing, advertising, customer service, education, content creation, healthcare, automotive, energy and utilities and video game development.

The growing proliferation of generative AI has boosted the demand for chips, benefiting semiconductor sales. According to the latest data released by the Semiconductor Industry Association, global semiconductor sales grew 5.3% to $48 billion in November 2023, marking the first year-over-year increase since August 2022. This year-over-year rise also came after eight consecutive months of sequential growth, signifying a strong recovery.

How to Make the Right Choice?

With the presence of several industry participants, finding the right tech stocks with the potential to beat on earnings can be daunting. However, our proprietary methodology makes this task fairly simple.

You could narrow down your choices by looking at stocks that have the perfect combination of two key elements — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

Earnings ESP is our proprietary methodology for determining stocks that have maximum chances of beating estimates in their next earnings announcement. It is the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Our research shows that for stocks with this favorable mix of ingredients, the odds of a positive earnings surprise are as high as 70%.

4 Semiconductor Stocks That Match the Criteria

Silicon Motion Technology (SIMO - Free Report) has an Earnings ESP of +4.92% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The company is scheduled to report its fourth-quarter 2023 results on Feb 6. The Zacks Consensus Estimate for earnings has increased 5 cents upward to 76 cents per share over the past 30 days.

NVIDIA Corporation (NVDA - Free Report) has an Earnings ESP of +3.68% and currently has a Zacks Rank of 2.

The company is scheduled to report its fourth-quarter fiscal 2024 results on Feb 21. The Zacks Consensus Estimate for earnings has increased by a penny to $4.49 per share over the past 30 days.

NVIDIA Corporation Price and EPS Surprise

NVIDIA Corporation Price and EPS Surprise

NVIDIA Corporation price-eps-surprise | NVIDIA Corporation Quote

Allegro MicroSystems (ALGM - Free Report) currently has an Earnings ESP of +1.16% and a Zacks Rank #3.

The company is set to report third-quarter fiscal 2024 results on Feb 1. The consensus mark for earnings has been steady at 29 cents per share over the past 60 days.

Allegro MicroSystems, Inc. Price and EPS Surprise

Allegro MicroSystems, Inc. Price and EPS Surprise

Allegro MicroSystems, Inc. price-eps-surprise | Allegro MicroSystems, Inc. Quote

Ambarella (AMBA - Free Report) is expected to report fourth-quarter fiscal 2024 results on Feb 27. The company has an Earnings ESP of +0.60% and a Zacks Rank of 3.

The consensus estimate for the bottom line is pegged at a loss of 33 cents per share, 5 cents narrower than the loss of 38 cents expected 60 days ago.

Ambarella, Inc. Price and EPS Surprise

Ambarella, Inc. Price and EPS Surprise

Ambarella, Inc. price-eps-surprise | Ambarella, Inc. Quote

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