Goldman Highlights Three Semiconductor Stocks Ahead of Earnings

Goldman Sachs has identified a more favorable trading environment for semiconductor stocks as they approach third-quarter earnings. The firm highlighted Applied Materials, Seagate, and Microchip as tactical investment ideas, following a sector pullback attributed to significant de-risking. Analysts led by James Schneider noted that semiconductor stocks have fallen sharply over the past two months, with the Philadelphia Semiconductor Index down 11% compared to a 4% gain for the S&P 500. This contrasts sharply with the cautious outlook Goldman had ahead of second-quarter results.

Goldman expects Applied Materials to raise its margin targets and provide a robust growth outlook at SEMICON West on October 13. The firm anticipates a strong report driven by DRAM and advanced logic, with management projecting a wafer fab equipment market growing toward $300 billion over time. The stock has already rallied about 12% in the past week, setting high expectations for the upcoming earnings.

For Seagate, Goldman forecasts a strong quarter driven by positive hard disk drive pricing and supportive demand. The firm projects about 2% revenue upside and guidance roughly 3% above consensus estimates. Analysts highlighted Seagate’s prudent supply strategy and advanced HAMR progress, positioning the company for incremental share gains. Investors will focus on capital returns, HAMR volumes, and HDD pricing.

Microchip is expected to show broad strength across end markets, particularly in datacenter and aerospace and defense. Goldman forecasts about 1% revenue upside and gross margin recovery to roughly 66% by the end of 2026. Analysts believe the Street under-models the analog recovery, making Microchip one of Goldman’s favorite names. The firm’s fiscal 2027 earnings estimate is about 3% above consensus.