Goldman Sachs: Americas Technology — Semiconductors 1Q Preview
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Goldman Sachs observes broad-based fundamental upside across the semiconductor industry heading into the first-quarter earnings season, favoring computing, memory, and semiconductor capital equipment sectors. Driven by an upward bias in hyperscaler capital expenditures, server CPUs and key ASIC projects present notable upside. For memory, the firm prefers HDD and NAND ecosystems due to a lack of near-term incremental supply. SemiCap companies benefit from wafer fabrication equipment spending pulled by DRAM and foundries, anticipating upward earnings revisions. Analog semiconductors show solid digital momentum, favoring firms with industrial, aerospace, defense, and data center exposure. Regarding tactical trades, Goldman is bullish on Applied Materials, Teradyne, and AMD, while bearish on KLA, ON Semiconductor, and ARM. Teradyne benefits from rising test demand and potential GPU share gains. AMD is driven by server CPUs, though PC softness partially offsets this. KLA faces lower inspection intensity despite a positive investor day. ARM holds a Sell rating due to smartphone headwinds, with a target price of $125. CDNS, MCHP, NXPI, SITM, and SNDK are favored Buy ratings, while TXN is rated Sell.