As the Q3 earnings season wraps, let’s dig into this quarter’s best and worst performers in the processors and graphics chips industry, including Penguin Solutions (NASDAQ: PENG) and its peers.

The biggest demand drivers for processors (CPUs) and graphics chips at the moment are secular trends related to 5G and Internet of Things, autonomous driving, and high performance computing in the data center space, specifically around AI and machine learning. Like all semiconductor companies, digital chip makers exhibit a degree of cyclicality, driven by supply and demand imbalances and exposure to PC and Smartphone product cycles.

The 8 processors and graphics chips stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 2.4% while next quarter’s revenue guidance was 14,226% above.

Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 8.6% since the latest earnings results.

Penguin Solutions (NASDAQ: PENG)

Based in the US, Penguin Solutions (NASDAQ: PENG) is a diversified semiconductor company offering memory, digital, and LED products.

Penguin Solutions reported revenues of $337.9 million, up 8.6% year on year. This print fell short of analysts’ expectations by 1.3%, but it was still a satisfactory quarter for the company with a beat of analysts’ EPS estimates but a slight miss of analysts’ revenue estimates.

"Fiscal 2025 was a year of strong execution and meaningful progress in our transformation from a holding company structure to an enterprise AI infrastructure solutions company," said Mark Adams, CEO of Penguin Solutions.

Penguin Solutions delivered the weakest performance against analyst estimates of the whole group. Unsurprisingly, the stock is down 26.2% since reporting and currently trades at $20.02.

Is now the time to buy Penguin Solutions? Access our full analysis of the earnings results here, it’s free for active Edge members.

Best Q3: Qorvo (NASDAQ: QRVO)

Formed by the merger of TriQuint and RF Micro Devices, Qorvo (NASDAQ: QRVO) is a designer and manufacturer of RF chips used in almost all smartphones globally, along with a variety of chips used in networking equipment and infrastructure.

Qorvo reported revenues of $1.06 billion, up 1.1% year on year, outperforming analysts’ expectations by 1.9%. The business had an exceptional quarter with a significant improvement in its inventory levels and revenue guidance for next quarter exceeding analysts’ expectations.

Although it had a fine quarter compared to its peers, the market seems unhappy with the results as the stock is down 9.6% since reporting. It currently trades at $85.78.

Is now the time to buy Qorvo? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: Allegro MicroSystems (NASDAQ: ALGM)

The result of a spinoff from Sanken in Japan, Allegro MicroSystems (NASDAQ: ALGM) is a designer of power management chips and distance sensors used in electric vehicles and data centers.

Allegro MicroSystems reported revenues of $214.3 million, up 14.4% year on year, exceeding analysts’ expectations by 1.4%. Still, it was a mixed quarter as it posted EPS in line with analysts’ estimates.

As expected, the stock is down 15.5% since the results and currently trades at $25.98.

Read our full analysis of Allegro MicroSystems’s results here.

Lattice Semiconductor (NASDAQ: LSCC)

A global leader in its category, Lattice Semiconductor (NASDAQ: LSCC) is a semiconductor designer specializing in customer-programmable chips that enhance CPU performance for intensive tasks such as machine learning.

Lattice Semiconductor reported revenues of $133.3 million, up 4.9% year on year. This result met analysts’ expectations. More broadly, it was a mixed quarter as it also recorded a significant improvement in its inventory levels but a miss of analysts’ adjusted operating income estimates.

The stock is down 4.3% since reporting and currently trades at $68.39.

Read our full, actionable report on Lattice Semiconductor here, it’s free for active Edge members.

Qualcomm (NASDAQ: QCOM)

Having been at the forefront of developing the standards for cellular connectivity for over four decades, Qualcomm (NASDAQ: QCOM) is a leading innovator and a fabless manufacturer of wireless technology chips used in smartphones, autos and internet of things appliances.

Qualcomm reported revenues of $11.27 billion, up 10% year on year. This print topped analysts’ expectations by 4.6%. Overall, it was an exceptional quarter as it also put up a significant improvement in its inventory levels and revenue guidance for next quarter exceeding analysts’ expectations.

The stock is down 2.7% since reporting and currently trades at $168.39.

Read our full, actionable report on Qualcomm here, it’s free for active Edge members.

Market Update

Thanks to the Fed’s series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% in November), and a notable surge followed Donald Trump’s presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by potential trade policy changes and corporate tax discussions, which could impact business confidence and growth. The path forward holds both optimism and caution as new policies take shape.

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