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Alpha and Omega Semiconductor ready to bounce, DOJ cloud lifts

Key points

  • AOS is a leading developer and manufacturer of power semiconductors, which could be a turnaround story in the second half as the bottoming cycle has begun for consumer electronics.
  • Power semiconductors are chips that control electrical power in devices and systems in numerous industries, including automotive, industrial, consumer electronics, and renewable energy.
  • The US Department of Justice concluded its criminal investigations without charges related to possible sales to Huawei during the 2019 blacklist.
  • 5 Stocks We Like Better Than Alpha and Omega Semiconductor

Power semiconductor developer Alpha and Omega Semiconductor Ltd. NASDAQ: AOSL manufactures computer chips that manage and control electrical power in numerous systems and devices. Regulating the flow of electrical current is often taken for granted, but it is a crucial function that requires power semiconductors to perform.

AOS products help improve energy efficiency, reduce electronic system costs, and improve electronics performance in a wide range of industries, including consumer electronics, telecommunications, industrial, automotive, and renewable energy. . The company competes with STMicroelectronics NV New York Stock Exchange: STM, Infineon Technologies AG OTCMKTS:IFNY and Vishay Intertechnology Inc. New York Stock Exchange: VSH in the computer and technology sector.

Common Power Semiconductors

Two of the most widely used power semiconductors are MOSFETs and IGBTs. Metal oxide semiconductor field effect transmitters (MOSFETs) regulate the flow of electrical current by varying the voltage applied to the gate terminal of a transistor. MOSFETs are one of the most common power semiconductors used in memory chips, microprocessors, and analog circuits that operate computers, cameras, and smartphones.

Insulated gate bipolar transistors (IGBT) are high-power chips used to switch and amplify electrical signals. IGBTs are commonly used in inverters that convert DC power to AC, such as solar inverters, battery backup systems, and electric vehicle (EV) motors. They are also used in power supplies found in televisions and computers, wind turbines, solar panels, industrial robots, and railway systems. Get AI-based insights on MarketBeat.

Standardization of electronics inventories

Inventory normalization is occurring across all consumer electronics, industrial and automotive segments. Mobileye is experiencing inventory normalization as its manufacturing customers are reviewing their ADAS chip inventory due to overstock after post-pandemic supply chain disruptions faced a hit to demand as consumers They withdrew discretionary spending.

Inventory recovery and normalization.

AOS reported its fiscal second-quarter 2024 EPS of 24 cents, beating consensus analyst expectations of 15 cents by 9 cents on February 6, 2024. Revenue fell 12.4% year over year to $165.29 million. dollars versus analyst estimates of $165.29 million. Non-GAAP gross margin was 28%, up from 28.8% in the same period last year. Non-GAAP operating income was $8.4 million, down from $11.2 million in the year-ago period. The company closed the quarter with $162.3 million in cash and cash equivalents.

Online guide

AOS issued in-line guidance for the fiscal third quarter of 2024 with expected revenue between $140 million and $160 million versus analyst consensus estimates of $159.17 million. Non-GAAP gross margins between 24% and 26%, taking into account lower factory utilization due to the Lunar New Year holiday in China.

The Justice Department abandons the criminal investigation.

The United States Department of Justice (DOJ) closed its criminal investigation into AOS’s compliance with export control regulations related to transactions with Huawei and its affiliates during Chinese trade bans in 2019. The indictment focused on possible unauthorized sales of products to Huawei during the US trade blacklist due to national security concerns in 2019. The Justice Department closed its investigations without any charges. AOS will continue to work with the United States Department of Commerce (DOC) with the ongoing civil investigation. Consult the heat map of the sector on MarketBeat.

Signs of a cycle that is bottoming out

Stephen Chang, CEO of AOS, commented that they are seeing a recovery in desktop and laptop computers, smartphones and power tools. However, the recovery is partially offset by the current inventory correction in the gaming sector and weak demand for solar and fast chargers.

Chang commented: “Beyond normal seasonality, promising signs suggest the cycle has bottomed out. “AOS’ diverse product portfolio mitigates near-term unpredictability while preparing us to take advantage of a broader market resurgence in the second half of calendar 2024.”

Second quarter story

Chang concluded: “More specifically, we are seeing encouraging near-term strength in graphics cards, AI accelerators for data centers, smartphones from Chinese OEMs, and electric mobility. “We are confident that our leading technology, broad and diverse range of products and world-class customer base strategically position AOS to navigate through the current cycle and thrive in the next.”

Alpha and Omega Semiconductor Ltd. Analyst Ratings and Price Targets They are on MarketBeat. Shares of Alpha and Omega peers and competitors can be found in the MarketBeat Stock Analyzer.

Alpha and Omega Semiconductor Stock Chart

Daily Descending Triangle Pattern

The AOSL daily candlestick chart illustrates a descending triangle pattern. The descending trend line is made up of lower highs formed at $29.11 on January 24, 2024. The 200-period daily moving average (MA) tried to hold support at $25.37 and even attempted a breakout, but The stock fell again when its results were released. Shares fell to a low of $21.37 before returning to the triangle range. The daily Relative Strength Index (RSI) broke out of the oversold 30 band. Retracement support levels are at $22.25, $21.02, $20.03, and $19.27.

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