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5 Top Chip Stocks Seek Support Amid Enterprise Demand Warning

Highly rated chipmakers Macom Tech ( MTSI ), Microsemi ( MSCC ), MaxLinear ( MXL ), Inphi ( IPHI ) and Cirrus Logic ( CRUS ) are dropping in heavy volume today, though they pared their losses as the tech-heavy Nasdaq rallied by the early afternoon. Some of the selling pressure is potentially coming from Juniper Networks ‘ ( JNPR ) earnings preannouncement late Monday. The networking equipment vendor lowered its first-quarter revenue and earnings expectations below Wall Street estimates, citing weaker-than-anticipated demand from enterprise customers. Macom tumbled intraday below its 50-day line and the 40 price level in intraday trade, but the shares are now looking for support at those levels, down 2.9% in early afternoon action. The stock is trading 11% below its recent high. Microsemi is plunging back below buy range from a cup-with-handle base buy point it initially cleared in mid-March, losing 2.5%. In intraday trade, shares neared the 50-day line, which recently crossed back above the 200-day line as the stock’s performance improved. MaxLinear also dropped back below buy range from a base it initially cleared in early March, though it pared its losses, sliding 2.8% in early afternoon action. Several weeks ago, the stock dipped back below buy range but found support at the 50-day line before regaining composure. Inphi is still well extended from a double-bottom entry at 28.54, but it tested the lower bound of its buy range from an alternate entry at 32.42. Shares dipped 1.2% to 33.41. And Apple ( AAPL ) supplier Cirrus Logic is testing support at its 50-day line, but it bounced back to trade unchanged. Shares are trading 7% below their high set last May. Apple, for its part, rose 0.6% intraday. Meanwhile, Juniper Networks gapped down 8% on the bearish outlook, plunging below its 50-day line in giant volume. The stock is now 29% below its November peak.

Macom Leapfrogs Apple-Supplying Chip Rivals With Lasers, Radar

FAA and NOAA demand for weather applications will drive approximately $500 million in additional annual revenue over the upcoming five years for IBD Leaderboard stock  Macom Technology Solutions ( MTSI ), a Needham analyst said Friday following the chipmaker’s “upbeat” analyst day. Macom stock rose 5.8% on the stock market today , to 43.79 — nearing its all-time high of 44.15, achieved Monday — and extended 5.7% from a 41.42 buy point. IBD’s 41-company Electronics-Semiconductor Manufacturing industry group jumped 2.3% Friday, spurred by Macom. Shares of chip rivals Analog Devices ( ADI ),  Qorvo ( QRVO ) and Skyworks Solutions ( SWKS ) — all Apple ( AAPL ) suppliers — rose 1.2%, 2.2% and 3.5%, respectively. Needham analyst N. Quinn Bolton reiterated his buy rating and 46 price target on Macom stock. Barclays boosted its price target on Macom stock to 44 from 41 and maintained an overweight rating. Macom Ogles Vast Growth Optical, gallium nitride (GaN) and active antenna radar could each double Macom’s approximately $500 million revenue over the next three to five years, “potentially driving up to $2 billion of annual revenue by 2020,” Bolton wrote in a research report. “While management was clear the team may not bat 1,000 and that timing of specific product ramps was difficult to accurately forecast, management has clearly set an objective to become a much larger company,” he wrote. Macom’s $2.3 billion market cap puts it distantly behind industry leader Intel ( INTC ) and Intel’s $150 billion market cap. Unlike its Apple-supplying rivals, Macom’s chips aren’t focused on consumer products but instead are used in commercial and industrial applications like cellphone base stations, military radar and lasers. Macom also is developing GaN-on-silicon chips, squaring off with privately held Transform, Infineon Technologies and Efficient Power Conversion (EPC). GaN transistors can turn on and off faster than silicon, can withstand a higher voltage and are markedly smaller. Could Gallium Nitride Take On Silicon? Last year, EPC figured out how to make them cheaper, too, EPC CEO Alex Lidow told IBD in February. Lidow used to head up International Rectifier, which Infineon acquired in 2014. Companies like EPC aim to use GaN in electronic components such as transistors. EPC grows a thin layer of gallium nitride on silicon wafers and, like Macom, it uses the chips in cellphone base stations. “GaN is being used in base stations, going up in Google balloons and Facebook ( FB ) drones,” Lidow said. Other applications include a swallowable colonoscopy pill, autonomous cars ( Alphabet ( GOOGL ) and Tesla Motors ( TSLA ) are among the competitors) and wireless charging. Lidow estimates a $370 billion total addressable market — $30 billion in power, $40 billion in analog and $300 billion in digital. Macom is trying to grab some of it. The company has been in talks with smartphone makers Huawei, Nokia ( NOK ) and Ericsson ( ERIC ) for over a year and just recently completed customer validation, Bolton wrote. “If the commercial contract negotiations go well, management believes the company could generate first production revenue for GaN-on-Si (GaN-on-silicon power amplifiers) by year-end 2016,” he wrote. Macom estimates that it can scoop 40%-60% of the base station power amplifier market over the next three to five years. RELATED: 5 Chip Stocks To Watch, Moving Up, With Apple’s Big Event March 21

5 Chip Stocks To Watch Are Moving Up, With Apple’s Big Event March 21

A basket of top-rated chip stocks are making moves around buy points now, with several moving up in Friday trading. And Apple ( AAPL ), a big user of semiconductors, just sent out press invitations for a March 21 event where it’s expected to introduce a small iPhone and another iPad. So which chip stocks are highly rated by IBD and get at least some of their business from Apple?  Broadcom ( AVGO ), IBD Leaderboard stock  Macom Technology Solutions ( MTSI ), Cirrus Logic ( CRUS ), Mellanox ( MLNX ) and Nvidia ( NVDA ) make the list. All are at least somewhat diversified, with revenue streams in everything from data center and mobile networking systems to powerful graphics chips for virtual reality and gaming, to connected car technology and now even artificial intelligence. Chips And Profit IBD 50 stock Broadcom was up more than 3% in midday trading in the stock market today , putting it just above and out of buy range from a double-bottom base. Macom was up nearly 6%, similarly above its ideal buy range. Broadcom and Macom Technology Solutions made IBD’s Stocks on The Move screen Friday, heading up in high volume. Broadcom made Thursday morning’s screen too. Early Thursday, Broadcom’s management team had presented at a Susquehanna Financial analysts’ conference. “It’s a great time to operate in the semiconductor industry,” CEO Hock Tan said there. “You have a substantial profit pool … compared to similar industries of the same size.” Loading the player…   Broadcom had started giving up some of its gains as stock indexes dipped into the red with falling oil prices, but it ended up with a 1.7% rise Thursday. Several other top-rated chip stocks moved up early Friday after declining Thursday. Cirrus Logic was up about 3% at midday. Mellanox was up 2% and Nvidia was up fractionally. On Thursday, Mellanox had slipped to the bottom of buy range, as had Macom Technology Solutions, while Nvidia had edged down to about 4% under a buy point from a cup base. While the stock market’s in a confirmed uptrend, much of the action is choppy with ups and downs in oil prices and economic concerns around the globe. Going into Friday trading, all five of these top-ranked chipmakers had fallen from a week ago, between 1% and 7%, with the S&P 500 index down 1%. Cirrus Logic and Mellanox were up 14% and 15% this year, respectively — the only ones of the five with notable gains. Nvidia, an IBD 50 stock, has the strongest IBD Composite Rating of the bunch, a best-possible 99, taking into account earnings growth, stock price gains and several other metrics. The others range between 90 and 98 in Composite Rating. Apple Chips It will take awhile for teardowns to show whose chips go into whatever new products Apple introduces, and longer for those chips to translate into reported sales, and lagging iPhone sales growth lately hasn’t helped the chips. Apple Sets March 21 To Launch Small iPhone, New iPad, Watch Bands https://t.co/MxIpxMFKvc pic.twitter.com/iPxQ1lTAFF — Investors.com (@IBDinvestors) March 10, 2016 Other markets are driving growth, however. Nvidia, for instance, said in its fourth quarter report, in February, that it’s at the “center of four exciting growth opportunities — PC gaming, VR (virtual reality), deep learning and self-driving cars.” Nvidia is a partner to electric car maker  Tesla Motors ( TSLA ) and other auto manufacturers, and said last month that it’s in an alliance with Facebook ( FB ) and Chinese Internet company Alibaba Group ( BABA ) for speedy artificial intelligence chips.