Alphawave Semi surprised investors this morning when the semiconductor company released interim earnings results that sent its London-traded shares tumbling by as much as 43% before paring the losses to finish the day down by 14%.
Alphawave’s leadership said on Monday that it had to cut its revenue forecast for 2024, but still expects to hit its targets from next year onward.
The chip designer said it now expects to generate revenue of $310 to $330 million in 2024, down from the $345 to $365 million it had projected earlier. Alphawave blamed the change in its outlook on the merger of two large AI customers in Korea as well as the timing of tape-outs in the second half of the year.
Tape-outs occur when Alphawave has completed its work and transfers the finalized design of a semiconductor device to chip foundries for fabrication. The Canadian company does not actually manufacture the chips. Instead, Alphawave focuses on developing the technology within semiconductors that allows them to transmit data more rapidly for use in artificial intelligence.
“Another guidance cut isn’t helpful but the important part for us, we believe, is the underlying business remains strong and visibility on 2025 is improving, aided by Alphawave being exposed to the best end market in semis–AI,” Barclays analyst Simon Coles said in a note to clients.
Barclays maintained an overweight rating on Alphawave’s shares, but lowered its price target to 190 pence from 195. The company’s shares closed Monday at 107.8 pence.
“Our OW [overweight] is predicated on the fact that Alphawave only needs to take a little market share to see material growth in the coming years given the growth expected in its end markets,” Coles added.
Alphawave’s filing on Monday showed that its revenue had been halved in the first half of the year to $91 million. The company also reported an adjusted net loss before depreciation, interest and taxes of $11.8 million, after booking a profit of $32.4 million in the same period last year.
“We expect revenue and adjusted Ebitda in the second half to increase significantly over the first half as our high-quality design wins from last year tape-out and convert into revenue,” John Lofton Holt, executive chairman of Alphawave, said in its filing.
Alphawave first debuted on the London Stock Exchange in May 2021 with a listing price of 410 pence and the backing of blue-chip asset managers BlackRock and Janus Henderson. In late 2021, the Financial Times raised questions over whether it had properly disclosed related-party transactions.