A slew of chip stocks are likely headed for gains after Apple’s product launch Tuesday in Cupertino, JPMorgan predicts.
With many investors expecting significant developments in the next generation of iPhone, JPMorgan released a report listing some of the companies likely to see shares jump, including Apple’s rising chip technology partner, Broadcom.
“As we have discussed in prior research, we expect Broadcom to benefit from increased dollar content in the forthcoming iPhone models, including the new OLED version that we expect to use Broadcom’s touch control technology,” wrote JPMorgan analyst Harlan Sur.
“In total, Broadcom has pointed to a 40% increase in blended content in the new iPhone models, and we believe the company’s non-RF content (wireless charging, touch controller, Wi-Fi/Bluetooth, GPS) is increasing by $3-$4 per iPhone versus last year’s models.”
The relationship between Apple and Broadcom has been hot lately, generating much attention from Wall Street analysts in the run-up to what is expected to be a major upgrade for the iPhone. Sur previously noted that the wireless charging partnership between Apple and chip giant Broadcom — “a key enabler of Apple’s best-in-class performance”— has been going on for about two years.
Apple’s new product presentation is set to start around 1 p.m. ET.
“We believe Broadcom is a leader in wireless communications, enterprise storage, networking, and broadband with broad-based exposure to positive trends,” wrote Sur, reiterating his overweight rating.
While Broadcom may make headlines, JPMorgan also highlighted antenna and radio frequency provider Qorvo. The company’s mobile segment supplies radio solutions that provide a wide variety of functions in the cellular radio space for major phone manufactures and could stand to reap big gains if Apple’s product launch is a success.
Qorvo is already up a whopping 38 percent since January. Seth Klarman, the value investing giant who draws comparisons to Warren Buffett, purchased a large stake in the company earlier this year. Klarman’s hedge fund, Baupost, acquired 7.2 million shares of Qorvo worth $493 million, according to the March quarter 13F filing.
Strong iPhone demand would benefit memory players like Micron Technology as well, which supplies phones with types of random access memory (RAM).
“Micron and other industry participants should benefit from increased DRAM demand (unit demand and potential increases in content per phone) from Apple in 2H17 and into 2018,” continued Sur. “We anticipate Micron benefitting from the new iPhone launches and remind investors that the iPhone 7+ contained 3GB of DRAM vs. 2G of DRAM for the iPhone 7 and prior iPhone versions.”
Source: Investment Cnbc
Chip stocks like Broadcom and Micron should see a boost from today's Apple event