Key insights
- Goldman Sachs sees upside for AMAT, TER, and AMD due to strength in DRAM, foundry, tester demand, and server CPUs, respectively. They cite potential downside for KLAC, ON, and ARM. This suggests continued strength in specific areas of the semiconductor sector, potentially benefiting related stocks, but also highlights areas of concern like automotive and smartphone-related headwinds.
Investing.com - Goldman Sachs identified several semiconductor stocks with potential upside heading into first-quarter earnings, citing fundamental strength across most sub-sectors of the semiconductor ecosystem.
The firm sees upside for Applied Materials stock (NASDAQ:AMAT), rated Buy, expecting incremental upside to estimates given capacity pull-ins for both DRAM and foundry. With approximately 60% exposure to etch and deposition, Goldman Sachs sees room for Applied Materials to continue re-rating toward peer valuation levels.
Goldman Sachs also sees upside for Teradyne stock (NYSE:TER), rated Buy, citing upside to Street estimates for the quarter and guidance given expected strength in tester demand across computing, optical, and memory. The firm noted potential disclosure around Teradyne’s opportunity to gain share in GPU testing.
The firm sees upside for Advanced Micro Devices stock (NASDAQ:AMD), rated Neutral, driven mainly by server CPUs with some potential offset from PC downside. The chipmaker has delivered a 183% return over the past year, supported by revenue growth of 34% in the last twelve months. With a PEG ratio of 0.51, InvestingPro data suggests AMD is trading at a low P/E ratio relative to its near-term earnings growth, and the stock appears slightly undervalued according to InvestingPro’s Fair Value analysis. Goldman Sachs sees a favorable setup for the stock driven by strength in server CPUs. Investors seeking deeper insights can access AMD’s comprehensive Pro Research Report, one of 1,400+ available on InvestingPro, along with 18 additional ProTips.
Goldman Sachs identified downside for KLA Corporation stock (NASDAQ:KLAC), rated Neutral, ON Semiconductor stock (NASDAQ:ON), rated Neutral, and Arm Holdings stock (NASDAQ:ARM), rated Sell, citing equipment spending skewed toward lower-intensity areas, automotive headwinds, and smartphone-related headwinds respectively.
In other recent news, Advanced Micro Devices (AMD) has been upgraded by Erste Group to a Buy rating, driven by strong demand for data center products and improving profitability. Analyst Hans Engel highlighted AMD’s expectation of 32% revenue growth year-over-year in the first quarter of 2026, fueled by the increasing need for high-performance CPUs and GPUs. Aletheia Capital also reiterated its Buy rating on AMD, emphasizing the company’s expanding role in the AI compute market. The firm noted AMD’s transition from a second-source GPU supplier to a comprehensive AI compute provider, particularly in agentic AI computing.
Additionally, AMD has partnered with Celestica to develop the Helios rack-scale AI platform. This collaboration will focus on research, development, and manufacturing of networking switches for the AI architecture. In broader industry news, Seaport’s Chief Equity Strategist, Jonathan Golub, identified AMD as presenting upside opportunities alongside Nvidia and Broadcom. This comes amidst a rebound in software stocks and compressed valuations in the semiconductor sector. Lastly, President Donald Trump has appointed tech leaders, including Jensen Huang and Mark Zuckerberg, to his science council, although this development is more industry-wide.
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