Semiconductor Stocks Tumble After Onto Innovation and Wolfspeed's Q1 Earnings Miss

Chip stocks were in focus on Friday after Onto Innovation and Wolfspeed reported quarterly earnings. Onto Innovation shares plummeted nearly 14% in premarket trading after the company reported better-than-expected results, while Wolfspeed's shares also declined. The semiconductor sector was under scrutiny following the earnings reports.

Chip stocks were in the spotlight on Friday as Onto Innovation (ONTO) and Wolfspeed (WOLF) reported their quarterly earnings. The semiconductor sector was under intense scrutiny following these reports.

Onto Innovation reported earnings of $1.51 per share, surpassing the Zacks Consensus Estimate of $1.47 per share. This compares to earnings of $1.18 per share a year ago. The company also beat revenue estimates, posting $266.61 million, which was 0.62% above the Zacks Consensus Estimate [2]. Despite these positive results, Onto Innovation shares declined by nearly 14% in premarket trading.

Wolfspeed, on the other hand, reported a loss of $0.72 per share, which was $0.10 better than the Zacks Consensus Estimate of $0.82 per share. The company's revenue for the quarter came in at $185 million, missing the consensus estimate by 0.48% [1]. Wolfspeed's shares also declined following the report.

Both companies have underperformed the market so far this year. Wolfspeed's shares have lost about 38.3% since the beginning of the year, while Onto Innovation shares have lost about 24.9%. The S&P 500 has declined by -4.3% during the same period [1][2].

The sustainability of the immediate price movement for both stocks will depend on management's commentary during the earnings calls. Investors should also keep an eye on the earnings outlook and estimate revisions trends, which currently indicate an unfavorable trend for both stocks [1][2].

For Wolfspeed, the current consensus EPS estimate for the coming quarter is -$0.80 on $194.77 million in revenues, while for the current fiscal year, it is -$3.30 on $756.27 million in revenues. For Onto Innovation, the current consensus EPS estimate for the coming quarter is $1.48 on $264.6 million in revenues, and for the current fiscal year, it is $6.09 on $1.07 billion in revenues [1][2].

Investors should be mindful of the industry outlook, as both companies belong to sectors currently ranked in the bottom 15% and 6% of the Zacks-ranked industries, respectively [1][2]. The top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1 [1][2].

References:
[1] https://www.nasdaq.com/articles/wolfspeed-wolf-reports-q3-loss-lags-revenue-estimates
[2] https://www.nasdaq.com/articles/innovation-surpasses-q1-earnings-and-revenue-estimates-0