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June 15th, 2022 | 15:15 CEST

SAP, BrainChip Holdings, Infineon - Chip stocks before the next wave!

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The current interest rate decision is casting its shadow ahead, and the horrendously rising inflation rates are unsettling market participants. In the fight against inflation, the US Federal Reserve will likely shrink its balance sheet further and herald more aggressive interest rate steps. However, there is then a risk of significantly weakening the economy. That would seriously worsen the macroeconomic picture and significantly increase the risk of the US sliding into recession. The biggest losers from a major interest rate hike will likely remain interest rate sensitive growth stocks. However, such a scenario is already priced in for many stocks.

time to read: 3 minutes | Author: Carsten Mainitz

Table of contents:

    BrainChip Holdings - Another exclamation mark

    With some stocks, one is glad when a stronger correction takes place, especially if you missed the first upward move. The share price performance of the Australian growth company BrainChip is symptomatic of this. After a price rally from around EUR 0.30 to EUR 1.75 at the high, the share price corrected by around 70%. A share of the developer of the highly innovative Akida chip currently costs the equivalent of EUR 0.57.

    Fundamentally, the IP company keeps putting exclamation points confirming the quality of the Akida chip. The inclusion in the AI partner program of the global semiconductor giant ARM underpins this once again. According to a statement, the UK-based company's partner program is an ecosystem of hardware and software specialists designed to enable developers to build the next generation of AI solutions. Mohamed Awad, vice president of IoT and embedded at ARM, commented: "As part of ARM's AI Partner Program, BrainChip will enable developers to address the need for high-performance and ultra-low-power edge AI inference, enabling new innovation opportunities."

    The "Akida" neuromorphic processor could become the new standard for the semiconductor industry. The advantages are that it is very low-power, high-performance, and promotes the growth of edge AI technology by using a neuromorphic architecture, a type of artificial intelligence inspired by the biology of the human brain.

    If you listen to expert opinions, it is the most efficient solution ever produced, learns on its own and is predestined for future topics such as the Internet of Things, autonomous driving and robotics. Should commercial production progress further and Akida conquer the mass market, the current market capitalization of EUR 1 billion is unlikely to last much longer.

    Infineon - Expansion of capacities

    One of Europe's largest semiconductor companies was also hit hard. The share price of the technology group was quoted at over EUR 40 at the end of last year. But now, the shares have corrected by around 45% to date. They recently marked a new low for the year at around EUR 24. The broad support zone in the area of EUR 22.50 is now increasingly coming into focus. Should this be broken, the psychologically important mark at EUR 20 beckons.

    To cope with the demand for scarce semiconductors, Infineon recently announced the expansion of its production capacities. "In the future, we will decide on a major investment every two or three years," new Chief Production Officer Rutger Wijburg told Handelsblatt. In the past, the group has built a new factory every four to five years. "It cannot be ruled out that we will also push ahead with major projects in parallel at some point," the manager said. So far, the Munich-based company has built one factory after another.

    Wijburg went on to say that the manager brushed aside concerns that Infineon might invest too much: "Structural overcapacity is not to be expected. After all, hardly any innovation remains that does not involve semiconductors."

    SAP - Competitor convinces

    The share of the Walldorf-based technology group could benefit in the short term from the quarterly figures of its US competitor Oracle. The Americans convinced with better than analyst forecast revenues from the booming cloud business. Revenues in the past quarter rose by 5% to USD 11.8 billion, and cloud revenues climbed 19% to USD 2.9 billion. The Company also topped analysts' forecasts in terms of profit, which came in at USD 3.2 billion. Adjusted earnings per share of USD 1.54 were more than 10% above market expectations.

    Oracle CEO Safra Catz said cloud revenue is expected to grow as much as 25% in the current quarter and more than 30% in the current fiscal year. "These revenues could grow up to 47% in the period ending in August, including cloud sales from Cerner," the executive commented during a conference call to discuss the quarterly results.

    Nevertheless, there is no all-clear for the SAP share. At around EUR 87, the stock is already close to the Corona low of March 2020. The support at EUR 84 is important for the time being. The chart will only brighten to the upside if the EUR 96.38 mark is breached.

    The high and longer than expected inflation is causing the monetary guardians to take drastic interest rate steps, which in turn burdens technology stocks in particular. Infineon and SAP are looking for a bottom, and a new upward wave could start for the innovative company BrainChip Holdings after a strong correction.

    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    Carsten Mainitz

    The native Rhineland-Palatinate has been a passionate market participant for more than 25 years. After studying business administration in Mannheim, he worked as a journalist, in equity sales and many years in equity research.

    About the author

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