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Nova have been highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – September 9, 2024 – Zacks Equity Research shares Nova (NVMI - Free Report) as the Bull of the Day In addition, Zacks Equity Research provides analysis on Super Micro Computer Inc. (SMCI - Free Report) , Western Digital Corp. (WDC - Free Report) , Pure Storage Inc. (PSTG - Free Report) and NVIDIA (NVDA - Free Report) .
I last wrote about Nova as the Bull of the Day in August of last year when you could still buy shares for $120.
I thought investors should buy those levels ahead of NVIDIA earnings later in the month. I was right, but not without a Sep-Oct market swoon that took NVMI shares back to $90.
Since then, Nova rode a wave of semiconductor market success all the way to $247, supported by its double-digit sales and profit growth.
This year's top line consensus calls for 25% growth to $647 million and the bottom line is expected to cash in at EPS of $6.39 for a 31.5% advance.
Steady Upside Surprises and Rising Growth
Will Nova be able to repeat this year's phenomenal growth? We can't be sure, but analysts are already leaning in that direction with next year's top line looking for 18% growth to $765 million while the profit projection calls for a 14% advance to $7.28.
So the past year is a tale of two types of investors: those who didn't understand Nova's key role in an exploding demand market, and those like me who knew better and took their eye off the ball.
Let me share what I wrote last year so you see how Nova was set for lift-off...
What's Ahead for NOVA as Semiconductor Lieutenant?
Nova is a key provider of semiconductor manufacturing and measurement technologies known as metrology. They serve dozens of high-tech industries including automotive, robotics, cloud services, smart energy grids, and even AR/VR.
We'll look at the growth opportunities for NOVA in an area called the "trailing node" right after we get to understand their core evolution.
NOVA LTD, formerly known as Nova Measuring Instruments, is based in Rehovot, Israel.
Here's how the company describes their mission...
Nova's advanced multidisciplinary dimensional metrology technologies combine complex opto-mechanical hardware with advanced optics and cutting-edge algorithms to continuously innovate for effective process control throughout the semiconductor fabrication life cycle.
Where Does NVMI Fit In the Semi/AI Ecology?
Metrology is the science of measurement and nowhere is precision more needed than in the "nanosphere" of chip manufacture. A nanometer (nm) is one billionth of a meter, and this is the distance of measurement for engineering transistors onto an integrated circuit (IC) board or card.
Chips have been plunging below 10nm for the past few years as Moore's Law gets new life from GPU pioneers like NVIDIA. For comparison, the coronavirus is about 50nm.
I explained some of this in my Top Stock Picks video about Nova on Tuesday, where I also suggested that this little engineer of Semi precision and purity may be an acquisition target for larger wafer fabrication equipment (WFE) companies like Applied Materials (AMAT - Free Report) , Lam Research (LRCX - Free Report) or KLA.
For less than $10 billion, any of these $50-100 billion Semi engineers could "bolt-on" Nova and secure their dominance in precision purity manufacturing.
What is the Trailing Node?
Last year, I also wrote an article on Global Foundries (GFS), the US-based semi "fab" operator. Ironically, the creation of GFS was borne in 2008 of a spin-off where Advanced Micro Devices (AMD - Free Report) decided it didn't want to do the foundry work anymore on its own chip designs.
Here's an important excerpt relevant to NOVA...
Nodes in semiconductor manufacturing indicate the features that a node production line can create on an integrated circuit, such as interconnect pitch, transistor density, transistor type, and other new technology.
This is especially important as the "leading edge" of chip design focuses on the sub-10 nanometer transistor architecture that also places new demands on the "trailing edge" that has to be able to "connect and keep up!"
WFE Demand Historically Driven By Leading Edge and Memory
Semiconductor analyst Mark Lipacis described the industry dynamics last year, even in the midst of AI-GPU mania that exceeded his expectations...
"Historically, WFE demand was primarily driven by leading-edge logic chips like CPUs in PCs, processors used in datacenters or application processors and modems used in cellphones, led by most advanced logic and increasingly smaller and cheaper memory solutions. Consequently, ~80% of WFE spend was driven by leading edge logic and memory."
Trailing Node as a New Driver of WFE, Driven by an IoT Computing Era
Lipacis continues...
"We've argued that the industry has entered the '4th Tectonic Shift to an IoT Computing Era,' where for the first time in history, the volume computing device, IoT, requires trailing node instead of the leading-edge chips required by previous computing eras, like handsets and PCs."
Bottom line: Nova plunged to $160 on the August 5 Bank of Japan panic and then recovered above $235 after its August 8 "beat-and-raise" earnings report. I would look to be a buyer above $160 during this fall classic market sell-off.
Additional content:
3 AI-Driven Storage Device Stocks in Focus to Maximize Your Returns
The computer storage devices industry players are well-poised to gain from solid momentum in cloud computing, Internet of Things (IoT), auto, connected devices, virtual reality and Artificial Intelligence (AI) in the long run.
Per a report from Gartner, worldwide IT spending is projected to reach $5.26 trillion in 2024, indicating an increase of 7.5% from the 2023 levels. This is an improvement over the earlier projection of overall spending of $5.06 trillion.
Gartner also reported that data center systems spending growth is anticipated to be 24% in 2024, up from the previous projection of 10% growth. The upside will be driven by increasing compute power demand, owing to the rapid proliferation of generative AI.
At this stage, we narrowed our search to three giant computer storage device stocks in which investors should focus. These companies are: Super Micro Computer Inc., Western Digital Corp. and Pure Storage Inc.
These stocks are currently trading at an attractive price, well below their 52-week highs. Most importantly, these stocks offer significant potential for price appreciation in the short-term. Each of our picks carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Super Micro Computer Inc.
Super Micro Computer has been benefiting on the back of robust demand for servers powered by high-end generative AI chipsets. SMCI is positioned as a leading provider of one-stop-shop, high-performance rack servers capable of powering advanced AI applications.
An astonishing rise in demand for high-performance rack servers boosted SMCI’s top and bottom lines. In order to support aggressive workloads, data centers are aggressively demanding high-density rack space and direct-to-chip liquid cooling. SMCI makes servers for enterprise, cloud, AI, metaverse and 5G telco/edge IT infrastructure.
Super Micro Computer has an expected revenue and earnings growth rate of 87.5% and 51.7%, respectively, for the current year (ending June 2025).
Enormous Price Upside Potential for SMCI Shares
Super Micro Computer recorded its all-time high price at $1,229.0 on March 8. After that, the stock price tumbled 66.3%. Despite the meltdown, the stock price has jumped 45.1% year to date. The average price target of brokerage firmsfor the stock represents an increase of 105.3% from the last closing price of $414.60. The brokerage target price is currently in the range of $325-$1,500.
Western Digital Corp.
Western Digital has been gaining from steady momentum in its HDD and Flash businesses. Higher flash ASPs aided both Client and Consumer end-market segments. For the first quarter of fiscal 2025, WDC’s HDD segment is forecast to gain from the healthy uptake of the SMR product portfolio. The strategy to commercialize ePMR, OptiNAND and UltraSMR technologies bodes well.
In July 2024, WDC unveiled the BiCS8 two-terabyte QLC memory die, crafted to meet the increasing demand for data centers and AI storage. It is currently sampling 64 terabyte SSD, and further aims to deliver in volume shipments by the end of 2024.
WDC expects the proliferation of generative AI-driven storage deployments to result in a client and consumer device refresh cycle, and boost content growth in smartphone, gaming, PC and consumer in the long run. Increasing AI adoption is likely to drive increased storage demand across both HDD and Flash at the edge and core, thereby providing ample business opportunities.
Western Digital has an expected revenue and earnings growth rate of 35.4% and more than 100%, respectively, for the current year (ending June 2025).
WDC Stocks Offer Robust Upside Potential
Western Digital recorded its 52-week high price at $81.55 on June 18. After that, the stock price tumbled 23.2%. Despite the weakness, the stock price has climbed 19.6% year to date. The average price target of brokerage firmsfor the stock represents an increase of 43.9% from the last closing price of $62.61. The brokerage target price is currently in the range of $75-$115.
Pure Storage Inc.
Pure Storage is benefiting from robust sales to new and existing enterprise customers across the data storage platform. An increase in demand for FlashBlade solutions, including FlashBlade//E and subscription-based offerings, propels top-line expansion.
PSTG sees strong growth prospects in the data-driven markets of AI, machine learning, IoT, Real-time Analytics, Log Analytics and Simulation. PSTG’s FlashBlade product has been gaining traction in the AI market.
In October 2023, PSTG unveiled data resilience solutions to global enterprises, including Pure Protect//DRaaS, energy efficiency guarantees for its Evergreen portfolio and AI-powered storage services (scalable) through the Pure1 management platform. Pure Protect//DRaaS is a unique Disaster Recovery as a Service (DRaaS) solution.
Pure Storage has an expected revenue and earnings growth rate of 10.5% and 16.2%, respectively, for the current year (ending January 2025).
Huge Price Upside Potential for PSTG Shares
Pure Storage recorded its 52-week high price at $70.41 on June 18. After that, the stock price melted 33.3%. Despite the meltdown, the stock price has surged 31.6% year to date. The average price target of brokerage firmsfor the stock represents an increase of 36% from the last closing price of $46.94. The brokerage target price is currently in the range of $40-$80.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Nova have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – September 9, 2024 – Zacks Equity Research shares Nova (NVMI - Free Report) as the Bull of the Day In addition, Zacks Equity Research provides analysis on Super Micro Computer Inc. (SMCI - Free Report) , Western Digital Corp. (WDC - Free Report) , Pure Storage Inc. (PSTG - Free Report) and NVIDIA (NVDA - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
I last wrote about Nova as the Bull of the Day in August of last year when you could still buy shares for $120.
I thought investors should buy those levels ahead of NVIDIA earnings later in the month. I was right, but not without a Sep-Oct market swoon that took NVMI shares back to $90.
Since then, Nova rode a wave of semiconductor market success all the way to $247, supported by its double-digit sales and profit growth.
This year's top line consensus calls for 25% growth to $647 million and the bottom line is expected to cash in at EPS of $6.39 for a 31.5% advance.
Steady Upside Surprises and Rising Growth
Will Nova be able to repeat this year's phenomenal growth? We can't be sure, but analysts are already leaning in that direction with next year's top line looking for 18% growth to $765 million while the profit projection calls for a 14% advance to $7.28.
So the past year is a tale of two types of investors: those who didn't understand Nova's key role in an exploding demand market, and those like me who knew better and took their eye off the ball.
Let me share what I wrote last year so you see how Nova was set for lift-off...
What's Ahead for NOVA as Semiconductor Lieutenant?
Nova is a key provider of semiconductor manufacturing and measurement technologies known as metrology. They serve dozens of high-tech industries including automotive, robotics, cloud services, smart energy grids, and even AR/VR.
We'll look at the growth opportunities for NOVA in an area called the "trailing node" right after we get to understand their core evolution.
NOVA LTD, formerly known as Nova Measuring Instruments, is based in Rehovot, Israel.
Here's how the company describes their mission...
Nova's advanced multidisciplinary dimensional metrology technologies combine complex opto-mechanical hardware with advanced optics and cutting-edge algorithms to continuously innovate for effective process control throughout the semiconductor fabrication life cycle.
Where Does NVMI Fit In the Semi/AI Ecology?
Metrology is the science of measurement and nowhere is precision more needed than in the "nanosphere" of chip manufacture. A nanometer (nm) is one billionth of a meter, and this is the distance of measurement for engineering transistors onto an integrated circuit (IC) board or card.
Chips have been plunging below 10nm for the past few years as Moore's Law gets new life from GPU pioneers like NVIDIA. For comparison, the coronavirus is about 50nm.
I explained some of this in my Top Stock Picks video about Nova on Tuesday, where I also suggested that this little engineer of Semi precision and purity may be an acquisition target for larger wafer fabrication equipment (WFE) companies like Applied Materials (AMAT - Free Report) , Lam Research (LRCX - Free Report) or KLA.
For less than $10 billion, any of these $50-100 billion Semi engineers could "bolt-on" Nova and secure their dominance in precision purity manufacturing.
What is the Trailing Node?
Last year, I also wrote an article on Global Foundries (GFS), the US-based semi "fab" operator. Ironically, the creation of GFS was borne in 2008 of a spin-off where Advanced Micro Devices (AMD - Free Report) decided it didn't want to do the foundry work anymore on its own chip designs.
Here's an important excerpt relevant to NOVA...
Nodes in semiconductor manufacturing indicate the features that a node production line can create on an integrated circuit, such as interconnect pitch, transistor density, transistor type, and other new technology.
This is especially important as the "leading edge" of chip design focuses on the sub-10 nanometer transistor architecture that also places new demands on the "trailing edge" that has to be able to "connect and keep up!"
WFE Demand Historically Driven By Leading Edge and Memory
Semiconductor analyst Mark Lipacis described the industry dynamics last year, even in the midst of AI-GPU mania that exceeded his expectations...
"Historically, WFE demand was primarily driven by leading-edge logic chips like CPUs in PCs, processors used in datacenters or application processors and modems used in cellphones, led by most advanced logic and increasingly smaller and cheaper memory solutions. Consequently, ~80% of WFE spend was driven by leading edge logic and memory."
Trailing Node as a New Driver of WFE, Driven by an IoT Computing Era
Lipacis continues...
"We've argued that the industry has entered the '4th Tectonic Shift to an IoT Computing Era,' where for the first time in history, the volume computing device, IoT, requires trailing node instead of the leading-edge chips required by previous computing eras, like handsets and PCs."
Bottom line: Nova plunged to $160 on the August 5 Bank of Japan panic and then recovered above $235 after its August 8 "beat-and-raise" earnings report. I would look to be a buyer above $160 during this fall classic market sell-off.
Additional content:
3 AI-Driven Storage Device Stocks in Focus to Maximize Your Returns
The computer storage devices industry players are well-poised to gain from solid momentum in cloud computing, Internet of Things (IoT), auto, connected devices, virtual reality and Artificial Intelligence (AI) in the long run.
Per a report from Gartner, worldwide IT spending is projected to reach $5.26 trillion in 2024, indicating an increase of 7.5% from the 2023 levels. This is an improvement over the earlier projection of overall spending of $5.06 trillion.
Gartner also reported that data center systems spending growth is anticipated to be 24% in 2024, up from the previous projection of 10% growth. The upside will be driven by increasing compute power demand, owing to the rapid proliferation of generative AI.
At this stage, we narrowed our search to three giant computer storage device stocks in which investors should focus. These companies are: Super Micro Computer Inc., Western Digital Corp. and Pure Storage Inc.
These stocks are currently trading at an attractive price, well below their 52-week highs. Most importantly, these stocks offer significant potential for price appreciation in the short-term. Each of our picks carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Super Micro Computer Inc.
Super Micro Computer has been benefiting on the back of robust demand for servers powered by high-end generative AI chipsets. SMCI is positioned as a leading provider of one-stop-shop, high-performance rack servers capable of powering advanced AI applications.
An astonishing rise in demand for high-performance rack servers boosted SMCI’s top and bottom lines. In order to support aggressive workloads, data centers are aggressively demanding high-density rack space and direct-to-chip liquid cooling. SMCI makes servers for enterprise, cloud, AI, metaverse and 5G telco/edge IT infrastructure.
Super Micro Computer has an expected revenue and earnings growth rate of 87.5% and 51.7%, respectively, for the current year (ending June 2025).
Enormous Price Upside Potential for SMCI Shares
Super Micro Computer recorded its all-time high price at $1,229.0 on March 8. After that, the stock price tumbled 66.3%. Despite the meltdown, the stock price has jumped 45.1% year to date. The average price target of brokerage firmsfor the stock represents an increase of 105.3% from the last closing price of $414.60. The brokerage target price is currently in the range of $325-$1,500.
Western Digital Corp.
Western Digital has been gaining from steady momentum in its HDD and Flash businesses. Higher flash ASPs aided both Client and Consumer end-market segments. For the first quarter of fiscal 2025, WDC’s HDD segment is forecast to gain from the healthy uptake of the SMR product portfolio. The strategy to commercialize ePMR, OptiNAND and UltraSMR technologies bodes well.
In July 2024, WDC unveiled the BiCS8 two-terabyte QLC memory die, crafted to meet the increasing demand for data centers and AI storage. It is currently sampling 64 terabyte SSD, and further aims to deliver in volume shipments by the end of 2024.
WDC expects the proliferation of generative AI-driven storage deployments to result in a client and consumer device refresh cycle, and boost content growth in smartphone, gaming, PC and consumer in the long run. Increasing AI adoption is likely to drive increased storage demand across both HDD and Flash at the edge and core, thereby providing ample business opportunities.
Western Digital has an expected revenue and earnings growth rate of 35.4% and more than 100%, respectively, for the current year (ending June 2025).
WDC Stocks Offer Robust Upside Potential
Western Digital recorded its 52-week high price at $81.55 on June 18. After that, the stock price tumbled 23.2%. Despite the weakness, the stock price has climbed 19.6% year to date. The average price target of brokerage firmsfor the stock represents an increase of 43.9% from the last closing price of $62.61. The brokerage target price is currently in the range of $75-$115.
Pure Storage Inc.
Pure Storage is benefiting from robust sales to new and existing enterprise customers across the data storage platform. An increase in demand for FlashBlade solutions, including FlashBlade//E and subscription-based offerings, propels top-line expansion.
PSTG sees strong growth prospects in the data-driven markets of AI, machine learning, IoT, Real-time Analytics, Log Analytics and Simulation. PSTG’s FlashBlade product has been gaining traction in the AI market.
In October 2023, PSTG unveiled data resilience solutions to global enterprises, including Pure Protect//DRaaS, energy efficiency guarantees for its Evergreen portfolio and AI-powered storage services (scalable) through the Pure1 management platform. Pure Protect//DRaaS is a unique Disaster Recovery as a Service (DRaaS) solution.
Pure Storage has an expected revenue and earnings growth rate of 10.5% and 16.2%, respectively, for the current year (ending January 2025).
Huge Price Upside Potential for PSTG Shares
Pure Storage recorded its 52-week high price at $70.41 on June 18. After that, the stock price melted 33.3%. Despite the meltdown, the stock price has surged 31.6% year to date. The average price target of brokerage firmsfor the stock represents an increase of 36% from the last closing price of $46.94. The brokerage target price is currently in the range of $40-$80.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
Media Contact
Zacks Investment Research
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https://www.zacks.com
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.