Why Allegro MicroSystems (ALGM) Is Down 7.2% After China Prioritizes Local AI Chipmakers Over U.S. Suppliers

Simply Wall St.12-14 16:14

Earlier this week, China updated its procurement guidelines to prioritize domestic AI chipmakers over U.S. suppliers, signaling reduced reliance on foreign semiconductor technology amid ongoing trade ...

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For Allegro MicroSystems, this policy shift raises fresh questions about the resilience of its China-related revenue streams and long-term market access in a key growth geography. Next, we’ll examine how China’s procurement tilt toward local AI chipmakers could reshape Allegro MicroSystems’ investment narrative and risk profile. Rare earth metals are an input to most high-tech devices, military and defence systems and electric vehicles. The global race is on to secure supply of these critical minerals. Beat the pack to uncover the 36 best rare earth metal stocks of the very few that mine this essential strategic resource.Allegro MicroSystems Investment Narrative RecapTo own Allegro MicroSystems, you need to believe in sustained demand for its power and sensor ICs in electric vehicles, ADAS and industrial automation, supported by a growing product portfolio and improving profitability. China’s new procurement tilt toward domestic AI chipmakers increases the near term uncertainty around Allegro’s China exposure, but it does not appear to directly hit the company’s current auto and industrial design win driven catalysts, while reinforcing geopolitical and market access risks that were already on the radar. Against this backdrop, Allegro’s launch of the ACS37100 high bandwidth TMR current sensor for xEV charging, clean energy and AI data centers looks especially relevant, since it underlines how much of the story still hinges on gaining content in fast growing auto and data center power applications rather than on AI compute silicon itself. That product focus may help cushion indirect fallout from China’s AI procurement policies, but it also means investors should watch closely how design wins translate into revenue as global auto and industrial demand ebbs and flows. Yet the bigger issue investors should be aware of is how quickly China focused competition could reshape Allegro’s pricing power and... Read the full narrative on Allegro MicroSystems (it's free!)Allegro MicroSystems' narrative projects $1.2 billion revenue and $249.0 million earnings by 2028. This requires 17.3% yearly revenue growth and a $317.6 million earnings increase from $-68.6 million today.Uncover how Allegro MicroSystems' forecasts yield a $38.58 fair value, a 42% upside to its current price.Exploring Other PerspectivesALGM 1-Year Stock Price Chart Three Simply Wall St Community fair value estimates for Allegro span roughly US$29.24 to US$38.58 per share, underlining how far opinions can spread. Against that backdrop, Allegro’s heightened China competition risk gives you one more reason to compare several viewpoints before deciding how its future performance could evolve.Explore 3 other fair value estimates on Allegro MicroSystems - why the stock might be worth just $29.24!Build Your Own Allegro MicroSystems NarrativeDisagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.A great starting point for your Allegro MicroSystems research is our analysis highlighting 3 key rewards that could impact your investment decision.Our free Allegro MicroSystems research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Allegro MicroSystems' overall financial health at a glance.Interested In Other Possibilities?Every day counts. These free picks are already gaining attention. See them before the crowd does:These 11 companies survived and thrived after COVID and have the right ingredients to survive Trump's tariffs. Discover why before your portfolio feels the trade war pinch.We've found 13 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.Find companies with promising cash flow potential yet trading below their fair value.  This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.The New Payments ETF Is Live on NASDAQ:Money is moving to real-time rails, and a newly listed ETF now gives investors direct exposure. Fast settlement. Institutional custody. Simple access.Explore how this launch could reshape portfoliosSponsored ContentNew: Manage All Your Stock Portfolios in One PlaceWe've created the ultimate portfolio companion for stock investors, and it's free.• Connect an unlimited number of Portfolios and see your total in one currency• Be alerted to new Warning Signs or Risks via email or mobile• Track the Fair Value of your stocksTry a Demo Portfolio for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. 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