Cypress Semiconductor (NASDAQ: CY) stock has entered 2018 on a high after soaring nicely last year. The chipmaker has wowed Wall Street by targeting fast-growing areas within the semiconductor space -- such as connected cars, connected homes, and factory automation -- as a part of its Cypress 3.0 strategy.
But will Cypress be able to sustain its impressive momentum in the new year? The company's fourth-quarter results, which will be released Feb. 1, will give investors a clearer picture of where this high-flying chipmaker is headed in 2018. Here's what to expect.
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Going a step further?
Wall Street expects Cypress to report $0.25 per share in earnings on revenue of $593 million for the quarter, a substantial improvement over the prior-year period's earnings of $0.15 per share and revenue of $530 million. These estimates are in line with the company's fourth-quarter guidance, though it won't be surprising if Cypress beats expectations because it had already booked 90% of its fourth-quarter revenue estimate less a month into the quarter. Investors should note that Cypress is supplying the USB Type-C port controller to Apple's (NASDAQ: AAPL) new iPhones for enabling fast charging, following its design win in the iPad Pro earlier this year.
In fact, Cypress' USB-C revenue had more than doubled from the second to the third quarter because of the iPhone production ramp. Apple's outlook for the December-ended quarter was better than expected thanks to broad-based strength across all product lines and strong iPhone demand.
But Cypress has more going for it than just Apple.
Hitting a higher gear
Cypress is following a strategy of attacking markets that are growing at a faster rate than the overall semiconductor industry. Automotive is one such area where Cypress sees a lot of potential because of the growing semiconductor content in cars.
In fact, Cypress' automotive business is currently bigger than NVIDIA's, supplying 30% of its total revenue. The chipmaker looks set to increase its automotive revenue thanks to its smart-product development moves.
For instance, Cypress released an embedded connectivity solution for cars earlier this month that integrates Wi-Fi and Bluetooth connectivity into a single platform. This chip comes equipped with two Wi-Fi modules, allowing all passengers to connect to a car's infotainment system and stream their own video or audio content simultaneously.
Cypress claims that this combo chip is "the highest-performance Wi-Fi device in our IoT (Internet of Things) portfolio," and the only one on the market to simultaneously stream two Wi-Fi signals. What's more, its design has already been approved by several customers to enable a wide range of features such as infotainment and telematics. The chip is in full production and is being shipped inside a couple of models already.