What Happened:

Shares of semiconductor designer Lattice Semiconductor (NASDAQ:LSCC) fell 8.5% in the afternoon session after the company reported first quarter results. The quarter itself was fine: Revenue beat by about 0.5%, operating income beat by 1.5%, and EPS beat by a penny. Guidance is what is causing weakness in the stock. Both revenue and implied operating profit guidance for the next quarter were below. The weakness seems to be caused by inventory destocking headwinds in communications infrastructure and within industrials and automotive in Europe. However, management also sees a second half of 2024 recovery, as inventory headwinds dissipate and new product ramps from Nexus and Avant contribute incremental revenues.

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What is the market telling us:

Lattice Semiconductor's shares are somewhat volatile and over the last year have had 18 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business. 

The previous big move we wrote about was 6 days ago, when the company gained 5.9% on the news that semiconductor peer, Texas Instruments reported first-quarter results that topped analysts' revenue and EPS expectations, driven by strong performance in its analog segment. Looking ahead, next quarter's revenue guidance was above Wall Street's estimates. 

On the other hand, its gross margin fell, and its inventory levels increased. Overall, this was a decent quarter for Texas Instruments. The results likely suggest strong demand for semiconductors, as more companies report quarterly results in the new earnings season. More specifically, Texas Instruments supplies power solutions for FPGAs--field programmable gate arrays. These customizable chips are LSCC's specialty.

Lattice Semiconductor is up 3.5% since the beginning of the year, but at $70.81 per share it is still trading 27.2% below its 52-week high of $97.26 from August 2023. Investors who bought $1,000 worth of Lattice Semiconductor's shares 5 years ago would now be looking at an investment worth $5,464.

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