Canaccord Genuity is out defending technology stocks this morning after analyst Bobby Burleson recently took a trip to Silicon Valley. He said, “orders broadly continue to track to expectations while smartphones and tablets are setting up for strong H2 seasonality.” His note does confirm that there are pockets of disappointing demand in PCs and in wireline but his top picks after the May sell off are as follows:
- Advanced Micro Devices Inc. (NYSE: AMD) based upon share gains in servers and notebooks offsetting slow PC demand; Maintained Buy rating.
- Broadcom Corporation (NASDAQ: BRCM) based upon its leverage to entry-level smartphones and tablets and with it holding share in high-end connectivity; Maintained Buy rating.
- Integrated Device Technology Inc. (NASDAQ: IDTI) due to stable core business, new product ramp in the second half of this year, and an underappreciated accretion on PLXT deal; Maintained Buy rating.
- Marvell Technology Group Ltd. (NASDAQ: MRVL) based upon its 500G ramp, a fading headwind from Research in Motion (NASDAQ: RIMM), and ramping TD demand; Maintained Buy.
Burleson noted that he is incrementally cautious on Altera Corporation (NASDAQ: ALTR) and Xilinx Inc. (NASDAQ: XLNX) due to inventories building in the face of slowing wireline. Of the two, Xilinx appears to have better near-term momentum on new products.
Intel Corporation (NASDAQ: INTC) was also noted as a caution due to slowing PC demand and also due to risk to its Ultrabook forecast.
Canaccord noted a Hold rating on NVIDIA Corporation (NASDAQ: NVDA) is based on sell-through and competitive concerns for Tegra and potential decline in GPU attach rates. However, the report notes that near-term demand appears to be better than expected based on positive supply chain checks.
JON C. OGG
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