The logo of NXP Semiconductor’s computer chip manufacturing plant in Nijmegen, Netherlands, March 14, 2024.
Piroshka van de Waurreuter | Piroshka van de Waurreuther
NXP Semiconductors Shares rose 26% on Wednesday, marking the company’s best day since it went public in 2010.
The chipmaker’s first-quarter results on Tuesday blew away Wall Street expectations.
The Dutch company reported adjusted earnings per share of $3.05, beating LSEG estimates of $2.95. The company’s sales rose 12% year over year to $3.18 billion, also exceeding LSEG’s forecast of $3.16 billion.
CEO Rafael Sotomayor attributed the growth to “industrial and automotive processing that supports software-defined vehicles and physical AI.”
As demand for data centers soars, the spread of artificial intelligence is reviving chip makers. Sotomayor emphasized the growing role of NXP’s data center applications during the company’s earnings call Tuesday.
The company reported data center-related revenue of about $200 million last year. Sotomayor said he expects it to reach more than $500 million by 2026.
Unlike other semiconductor companies, Nvidia and advanced micro deviceNXP does not manufacture graphics processing units. Its chips are primarily used in cars to power data center infrastructure tasks rather than AI computing.
“As data centers grow, the constraints are not just compute and memory,” Sotomayor said on the earnings call. “These also include power, cooling, uptime and safe control, and I think this is NXP’s role.”
Analysts responded positively to the report.
T.D. Cowen raised its price target from $250 to $310 in response to the report. morgan stanley The target amount has also been raised from $299 to $335.
“NXP has clearly demonstrated the confidence and clarity needed to support its long-term story, which we have believed in. We now have a clearer line of sight regarding execution,” Morgan Stanley analyst Joseph Moore said in a note.
of VanEck Semiconductor ETF (SMH)The index tracking the sector is up about 30% this month.
NXP Semiconductor’s daily stock price chart.
Correction: This article has been updated to remove Intel as the GPU manufacturer. Intel only makes CPUs.
