GrowthTurtle
Data Science PhD & IEEE Fellow, Ex-Two Sigma
Amkor Technology looks expensive against its earnings, trading at 24x trailing and 19x next year's versus the roughly 18x chip-equipment makers usually get. At 18x mid-cycle EPS of $1.87, give or take 12%, fair value is $29.54-$37.60, putting the $53.86 price 43% above the top of that range. The view uses reported earnings and estimates only, without fundamental work. x.com
Amkor's underwhelming guidance is not the kind of sign seen at a bottom. x.com
ASML is an amazing business, but it is pricey right now. x.com
Amkor's expansion in advanced packaging supports a bullish growth outlook as that work becomes more important. Packaging accounts for 88% of sales and computing revenue rose 25%; capacity spending explains negative free cash flow. Q3 EPS was $0.76, implying roughly 12x annualized earnings, while Q4 EPS guidance is $0.65-$0.75. The compute opportunity is only starting, despite the decline in mobile. x.com x.com x.com x.com
Aixtron and Veeco will probably never see their old highs again, because semiconductor equipment makers look stretched above about 11x price-to-sales. Fifteen years of software multiple expansion have conditioned investors to accept high multiples, but equipment makers have very different margin structures. The broader bull market is still far from over even though fundamentals look overheated, with momentum doing the heavy lifting. x.com
Semiconductor gains will now have to come from earnings growth rather than multiple expansion, but NVIDIA at 19x forward earnings can still make money. Rising margins normally compress multiples because peak margins signal peak cycle; this cycle ran long and euphoric buying drove multiples up, so a correction was bound to happen. With capex growth projected to slow from 2028, semis growth will likely slow too, and the window to profit from buying chip stocks at 25x sales is closed. x.com
Amkor looks cheap at roughly 17x projected 2027 earnings of $2.83 a share, with its Arizona advanced-packaging capacity near TSM not expected to run near full utilization until 2028. The buildout has incurred substantial debt; the market may begin looking toward 2028 next year. The ramp remains prospective. x.com x.com
Amkor Technology is clearly undervalued at a P/E of 20. Shares fell 25% after earnings even though Amkor announced an Nvidia partnership a few days earlier. x.com
Customer prepayments of about $3.2B for Amkor's capacity exceed its roughly $2.5B planned capex this year, funding the buildout ahead of delivery. Buy, with a $48 target. x.com
Amkor could be worth a small starter position because semiconductor packaging and test should keep growing, and Intel is using it as a partner to ramp EMIB-T packaging. The stock took a beating after earnings, so it may be worth waiting for a further drop in volatile markets. x.com
Amkor's selloff on sandbagged guidance is wild given how the business is performing. The stock fell as much as 25% because revenue guidance was about $2.0B, even though Q2 revenue beat, EPS came in at $0.70 versus $0.48 expected, gross margin expanded to 16.8% and AI/HPC demand remains strong. Wall Street wanted perfection and punished anything less. x.com x.com
