Key Takeaways
- NXP Semiconductors stock rose 5% today after Volkswagen chose NXP’s S32K5 microcontrollers as a building block of its future vehicle architecture.
- The chips will go into the architecture Volkswagen is building with Rivian, across all of Volkswagen Group’s brands, and the first vehicle is planned for 2027.
- Analysts already expect NXP’s revenue to grow from $12.3 billion in 2025 to $16.0 billion in 2027, so this win makes that forecast easier to believe more than it raises it.
- NXP reports third-quarter results tomorrow, and its guidance will matter more to the stock than a deal whose first car arrives in 2027.
NXP Semiconductors (NXPI) just landed one of the biggest names in autos, a day before its third-quarter report.
Shares are up [5%] today after NXP and Volkswagen (VWAGY) announced a strategic partnership before the open. Other auto-chip stocks rose 1% to 3% as chip stocks bounced, so the deal looks like the reason NXP is running ahead of them.
One chip, every brand
NXP’s S32K5 microcontrollers will be a building block of Volkswagen’s future software-defined vehicle architecture, across all of the group’s brands and vehicle segments. The details:
- In each zonal controller, the S32K5 is the core processor. That controller runs the lighting, body, comfort, chassis and safety functions for one area of the car, work that used to take separate chips and control units.
- The architecture comes from RV Tech, Volkswagen’s joint venture with Rivian (RIVN), and both companies plan to use it in their vehicles.
- The first vehicle built on it is planned for 2027.
Karsten Schnake, the Volkswagen brand board member responsible for procurement, said the partnership shows “how Volkswagen Group is taking a more active role in the semiconductor value chain: defining our technology needs early, leveraging our scale across brands and creating greater long-term planning certainty for both sides.”
For NXP, that’s one design win that can carry across both Volkswagen’s lineup and Rivian’s.
TIKR tracks 30 analysts on NXP Semiconductors. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on NXP Semiconductors, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See NXP Semiconductors’ Analyst Ratings
The Street is already counting on a rebound
Analysts expect NXP’s revenue to climb from $12.3 billion in 2025 to $16.0 billion in 2027 and $17.3 billion in 2028…
…and normalized EPS to rise from $11.81 to $18.30 and then $21.35 over the same years:
A win that starts shipping in 2027 won’t move this year’s estimates, but it makes the 2027 and 2028 numbers easier to believe.
Plus, the auto recovery is already under way. NXP’s automotive revenue was $1.94 billion in the second quarter, up 12% from a year earlier and more than half of its $3.50 billion total.
Tuesday matters more
NXP reports third-quarter results tomorrow. In July, it guided to $3.75 billion of revenue at the midpoint. What management says about auto demand going into 2027 will matter more to the stock than a partnership whose first car arrives that year.
My take: Volkswagen’s choice is a real vote of confidence in NXP’s auto chips, and it makes the Street’s growth forecast for 2027 and 2028 look more realistic. Today’s gain looks earned.
Of course, this deal won’t bring in revenue until Volkswagen’s first vehicles on the new architecture arrive in 2027, and tomorrow’s guidance could change the picture fast.
So what is NXP Semiconductors stock actually worth?
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