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Analysts at Barclays wrote in a report on Monday that they presented their outlook for semiconductor companies in 2023, which "will be more positive" with more optimistic price updates and targets for some established names.
"Our New Year's resolution was to be bullish on the group after being extremely negative for much of 2022," wrote analysts at Barclays. "We continue to see this correction as the worst since the tech bubble [2000]. Below, we model valuations for nearly every name we cover, even without macrorecession."
Nevertheless, Barclays is more bullish on companies related to data centers, personal computers (PCs) and phones.
In particular, they highlight the artificial intelligence (AI) capabilities that have emerged in recent weeks amid the hype surrounding Chat GPT and other generative AI technologies.
"We can't fully demonstrate the capabilities of generative AI (such as chat GPT), but it appears to be AI workloads with real applications at the end," the analysts wrote, pointing to their advanced microdevice updates on display. (Note AMD) For overweight to equal weight, the price target was raised from $70 to $85.
Analysts say AI opportunities are also spilling over into Nvidia ( NVDA ), raising their price target on the stock to $250 from $170, while maintaining an overweight position.
" Nvidia continues to be… the leader in GPU/AI," the analysts wrote. "It would be nice if the group was as cheap as we've seen in other recessions, but we underestimated the amount they wanted to go before the semi-finals and we don't see the group in the October low test." "
Barclays is also bullish on Qualcomm (QCOM), which analysts upgraded from equal weight to overweight, with a price target of $120 to $150. They said several factors kept the group bullish, highlighting growth opportunities driven by cars and IoT-connected devices as well as tailwinds from China and the premium chip sector.
"China's relaunch is an important theme for 2023, and we think China's headwinds could become headwinds in the second half [of the second half]," the analysts said, adding that they also "see Qualcomm as the undisputed leader." . And it's encouraging that the market doesn't seem to be returning to intense competition with Qualcomm, indicating they're not ready to engage in a price war."
But not all optimism rests under a rock. Far from it, Barclays is downgrading Applied Materials ( AMAT ) from equal weight to underweight due to increased caution in semiconductor capital goods-oriented groups.
"We view the semi-cap space as the group's biggest disconnect at the moment and have shorted three names (Applied Materials , KLA Corporation (KLAC) and VECO Instruments (VECO)) as we still see a plate front in 2024," though "a positive earnings holiday." expected," the analyst said.
Email Jack Denton at jack.denton@barrons.com
