U.S. job market worsens significantly

The ISM Manufacturing Index for July was 46.8, missing expectations of 48.8, June was at 48.5. U.S. manufacturing activity entered deeper into contraction. Demand was weak again, output declined, and inputs stayed generally accommodative. The New Orders Index remained in contraction, registering a 47.4, 1.9 points lower than the 49.3 recorded in June. The July reading of the Production Index (45.9) was 2.6 points lower than June’s figure of 48.5. The Prices Index registered 52.9, up 0.8 point compared to the reading of 52.1 in June. The Backlog of Orders Index registered at 41.7, equaling its June reading. The Employment Index registered at 43.4, down 5.9 points from June’s figure of 49.3.

The Supplier Deliveries Index indicated slowing deliveries, registering a 52.6, 2.8 points higher than the 49.8 recorded in June. The Inventories Index registered at 44.5, down 0.9 point compared to June’s reading of 45.4. The New Export Orders Index reading of 49 was 0.2 point higher than the 48.8 registered in June. The Imports Index remained in contraction in July, registering 48.6, 0.1 point higher than the 48.5 reported in June. In terms of the US stock market, as investors’ recession fears have come to the fore due to slowing manufacturing, the S&P 500 index was down 2% last week, and we expect the S&P 500 index to fluctuate between 5,200-5,500 points.

In terms of industry, the semiconductor sector has a high growth rate and great market space in the medium to long term, investors could pay attention to relative companies.

AMD (AMD.US) delivered strong revenue and earnings growth in 2Q24 by record Data Center segment revenue. Revenue in 2Q24 amounted to US$5.8 billion, up 9% YoY, with gross margin of 49%, up 3 ppts YoY. Net income increased by 881% YoY to US$265 million.

In terms of business segment, record Data Center segment revenue reached US$2.8 billion, up 115% YoY primarily driven by the steep ramp of AMD Instinct™ GPU shipments, and strong growth in 4 th Gen AMD EPYC™ CPU sales. Client segment revenue was US$1.5 billion, up 49% YoY and 9% QoQ primarily driven by sales of AMD Ryzen™ processors. Gaming segment revenue stood at US$648 million, down 59% YoY and 30% QoQ primarily due to a decrease in semi-custom revenue. Embedded system segment revenue was US$861 million, down 41% YoY as customers continued to normalize their inventory levels. Looking forward to Q3, AMD expects revenue to be approximately US$6.7 billion, plus or minus US$300 million. Non-GAAP gross margin is expected to be approximately 53.5%. It is recommended to buy at US$129, target at US$150, and stop loss at US$123.

Qualcomm(QCOM.US)’s revenue in 3Q24 amounted to US$9.4 billion, up 11% YoY. QTL revenues reached US$1.3 billion and EBT margin was 70%, in line with expectations. QCT delivered revenues of US$8.1 billion and EBT margin of 27%, which was at the high end of the guidance range, driven by upside in both IoT and automotive.

QCT handset revenues stood at US$5.9 billion, up 12% YoY, reflecting Qualcomm’s scale in premium Android handsets and greater than 50% YoY growth in revenues from Chinese OEMs. QCT IoT revenues increased by 9% QoQ to US$1.4 billion as the Mgt continued to see a gradual recovery in the industrial environment. Qualcomm delivered the fourth consecutive quarter of record QCT automotive revenues of US$811 million with QoQ growth of 34%. The revenue acceleration reflected content growth in new vehicle launches as Qualcomm became the leading supplier of advanced computing and connectivity solutions to the automotive industry. Looking forward to Q4, the Mgt expected revenues of US$9.5 billion to US$10.3 billion and non-GAAP EPS of US$2.45 to $2.65. It is recommended to buy at US$155, target at US$180, and stop loss at US$148.