Technology / Semiconductor / Internet Research

Nicolas Baratte

Equity Bottom-Up

Renesas Electronics Corporation researches, develops, designs and manufactures electronic components such as semiconductors and integrated devices.

<ul>
<li>Revenues are still declining by ~teens% YoY but margins shows signs of improvements as end-demand improves and utilization is low. </li>
<li>Renesas doesn’t have an inventory problem and increasing revenues will lead to higher utilization and higher margins. </li>
<li>As Renesas is showing signs of a bottom, the stock is very cheap, trading at -2 standard deviations or 11x 2025 EPS, 9x 2026 EPS.</li>
</ul>


Revenues are still declining by ~teens% YoY but margins shows signs of improvements as end-demand improves and utilization is low. 
Renesas doesn’t have an inventory problem and increasing revenues will lead to higher utilization and higher margins. 
As Renesas is showing signs of a bottom, the stock is very cheap, trading at -2 standard deviations or 11x 2025 EPS, 9x 2026 EPS.


Renesas 1Q25: Cheap Stock That’s Bottoming Out

STMicroelectronics N.V. designs, develops, manufactures, and markets semiconductor integrated circuits and discrete devices. The Company's products are used in the telecommunications, consumer electronics, automotive, computer, and industrial sectors. Geographically, customers are located in North America, Europe, and the Asia Pacific region.

<ul>
<li>Very poor 1Q25, operating profit close to zero. 2Q a bit better with lower revenue decline, but OP still close to zero.  </li>
<li>Management claims 1Q is the bottom for revenues, its possible, but 2 large risks: restructuring costs and very high inventories.</li>
<li>Consensus expects a slow recovery into 2026, the stock looks cheap at 11x 2026 EPS. However, given the firm’s track record and the risks mentioned, lets wait 1 more quarter.</li>
</ul>


Very poor 1Q25, operating profit close to zero. 2Q a bit better with lower revenue decline, but OP still close to zero.  
Management claims 1Q is the bottom for revenues, its possible, but 2 large risks: restructuring costs and very high inventories.
Consensus expects a slow recovery into 2026, the stock looks cheap at 11x 2026 EPS. However, given the firm’s track record and the risks mentioned, lets wait 1 more quarter.


STMicro: Ugly but Mngt Says 1Q25 Is the Bottom. Restructuring Has to Start, Horrendous Inventories.

Intel Corporation designs, manufactures, and sells computer components and related products.  The Company's major products include microprocessors, chipsets, embedded processors and microcontrollers, flash memory products, graphics products, network and communications products, systems management software, conferencing products, and digital imaging products.

<ul>
<li>1Q better than guided, 2Q a bit better but margins and net income remain very low. Reiteration that 1Q25 is the trough. Mngt mentions concerns about “the macro” and “tariffs”.</li>
<li>CEO emphasizes "it won’t be easy" to fix products, manufacturing, culture. Re-org is coming but no details. Lower Opex but "we have not yet identified what that means for headcount".</li>
<li>Consensus continues to expect a swift runaround into 2026. Based on this optimistic forecast, the stock trades at 18x 2026 EPS. Too many unknowns.</li>
</ul>


1Q better than guided, 2Q a bit better but margins and net income remain very low. Reiteration that 1Q25 is the trough. Mngt mentions concerns about “the macro” and “tariffs”.
CEO emphasizes "it won’t be easy" to fix products, manufacturing, culture. Re-org is coming but no details. Lower Opex but "we have not yet identified what that means for headcount".
Consensus continues to expect a swift runaround into 2026. Based on this optimistic forecast, the stock trades at 18x 2026 EPS. Too many unknowns.


Intel 1Q25: Work in Progress, More Unknowns than Clarity

SK Hynix Inc. provides products and services for the electronic components industry. The Company manufactures semiconductors, such as dynamic random access memory (DRAM), NAND flash memory, and static random access memory (SRAM) chips.

<ul>
<li>Same as last quarter: very strong AI / Server demand, capacity sold out for 12 months, HBM3E 12Hi becomes majority in 2Q25. HBM is the only driver. </li>
<li>Everything else remains weak. The conundrum remains: there is only 1 driver: AI / HBM. SK Hynix is the leading vendor, 12-18 months ahead of competitors. Is it sustainable? </li>
<li>The market thinks not sustainable and the stock is very cheap at 5x 2025 4x 2026 EPS. SK Hynix still trades like a cyclical stock – is it?</li>
</ul>


Same as last quarter: very strong AI / Server demand, capacity sold out for 12 months, HBM3E 12Hi becomes majority in 2Q25. HBM is the only driver. 
Everything else remains weak. The conundrum remains: there is only 1 driver: AI / HBM. SK Hynix is the leading vendor, 12-18 months ahead of competitors. Is it sustainable? 
The market thinks not sustainable and the stock is very cheap at 5x 2025 4x 2026 EPS. SK Hynix still trades like a cyclical stock – is it?


SK Hynix: Record-High Profits, the Stock Gets Cheaper.

Texas Instruments Incorporated operates as a semiconductor design and manufacturing company. The Company develops analog ICs and embedded processors. Texas Instruments has manufacturing or sales operations worldwide.

<ul>
<li>Demand for Auto &amp; Industrial Semis was weak in 2024, Semi inventories remain high. But TXN beats 1Q guidance handsomely, 2Q is above expectations. TXN is back to YoY growth.</li>
<li>Critically, the Industrial market is recovering rapidly, Auto is back to modest growth. Management has some concerns that there could be re-stocking ahead of US import tariffs. </li>
<li>Consensus is too low but the stock is not cheap, has deflated from bubble levels but still not cheap.</li>
</ul>


Demand for Auto &amp; Industrial Semis was weak in 2024, Semi inventories remain high. But TXN beats 1Q guidance handsomely, 2Q is above expectations. TXN is back to YoY growth.
Critically, the Industrial market is recovering rapidly, Auto is back to modest growth. Management has some concerns that there could be re-stocking ahead of US import tariffs. 
Consensus is too low but the stock is not cheap, has deflated from bubble levels but still not cheap.


Texas Instruments: Surprisingly Good 1Q25, Good 2Q Guidance. End-Markets Are Back to YoY Growth.

Nicolas Baratte has been a financial analyst since 2000, covering the Semiconductor sector and Global Technology. Nicolas has worked on the sell-side for JPMorgan, CLSA. On the buy-side for a Tiger fund and Prudential. Nicolas has covered semiconductors, Asian hardware and components, and the Global Tech supply chain. Nicolas lives mostly in Taiwan, sometimes in France and is in New York regularly.

Nicolas Baratte
Technology / Semiconductor / Internet Research

Renesas 1Q25: Cheap Stock That’s Bottoming Out

Despite declining revenues, Renesas is showing signs of margins improvement due to increased end-demand and low utilization, making the stock a...

Nicolas Baratte

STMicro: Ugly but Mngt Says 1Q25 Is the Bottom. Restructuring Has to Start, Horrendous Inventories.

Poor 1Q25 with close to zero OP, slight improvement in 2Q but risks of restructuring and high inventories. Consensus expects slow recovery, stock...

Nicolas Baratte

Intel 1Q25: Work in Progress, More Unknowns than Clarity

CEO acknowledges challenges ahead in fixing products, manufacturing, and culture. Stock trading at 18x 2026 EPS with uncertainties looming.

Nicolas Baratte

SK Hynix: Record-High Profits, the Stock Gets Cheaper.

Strong AI and server demand driving SK Hynix's success, but market questions sustainability of HBM as stock remains undervalued.

Nicolas Baratte

Texas Instruments: Surprisingly Good 1Q25, Good 2Q Guidance. End-Markets Are Back to YoY Growth.

After weak demand for Auto & Industrial Semis in 2024, TXN beats 1Q guidance and is back to YoY growth. However, concerns about re-stocking ahead...

Nicolas Baratte

Renesas 1Q25: Cheap Stock That’s Bottoming Out

​Despite declining revenues, Renesas is showing signs of margins improvement due to increased end-demand and low utilization, making the stock a...

Nicolas Baratte

STMicro: Ugly but Mngt Says 1Q25 Is the Bottom. Restructuring Has to Start, Horrendous Inventories.

​Poor 1Q25 with close to zero OP, slight improvement in 2Q but risks of restructuring and high inventories. Consensus expects slow recovery, stock...

Nicolas Baratte

Intel 1Q25: Work in Progress, More Unknowns than Clarity

CEO acknowledges challenges ahead in fixing products, manufacturing, and culture. Stock trading at 18x 2026 EPS with uncertainties looming.

Nicolas Baratte

SK Hynix: Record-High Profits, the Stock Gets Cheaper.

​Strong AI and server demand driving SK Hynix's success, but market questions sustainability of HBM as stock remains undervalued.

Nicolas Baratte

Texas Instruments: Surprisingly Good 1Q25, Good 2Q Guidance. End-Markets Are Back to YoY Growth.

​After weak demand for Auto & Industrial Semis in 2024, TXN beats 1Q guidance and is back to YoY growth. However, concerns about re-stocking ahead...

Nicolas Baratte

Despite declining revenues, Renesas is showing signs of margins improvement due to increased end-demand and low utilization, making the stock a...

Poor 1Q25 with close to zero OP, slight improvement in 2Q but risks of restructuring and high inventories. Consensus expects slow recovery, stock...

Strong AI and server demand driving SK Hynix's success, but market questions sustainability of HBM as stock remains undervalued.

After weak demand for Auto & Industrial Semis in 2024, TXN beats 1Q guidance and is back to YoY growth. However, concerns about re-stocking ahead...