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2 earnings reports this week bode very well for AOSL

|Includes: Alpha and Omega Semiconductor Limited (AOSL), ON

The first one is one you probably noticed- Intel. Intel indicated very healthy PC end markets with seasonal growth in the 2H of the year to complement the above-seasonal growth in 1H. The low end of their Q3 guidance was above consensus and it should be noted they have absolutely smashed their own Q1 and Q2 guidance.

The second one was probably not noticed as much. Fairchild Semiconductor, one of AOSL's primary competitors in low-voltage MOSFETs, also posted stellar results, with revenue of $410M and adjusted EPS of $0.40 vs. the consensus of $399M and $0.31. Forward guidance was above consensus. Importantly, the company says channel inventory continues to be in the middle of the range while gross margin will continue to improve, indicating healthy industry conditions for suppliers.

So, I expect AOSL to post stellar results. It will also be their first quarter to report as a public company so you can be sure that they and the analysts sandbagged the results. I would not be shocked to see the stock regain its IPO price of $18, although given that Fairchild is only up 5% despite posting great results and being cheap on an absolute basis, there really is no telling what the reaction will be. Regardless of the reaction, this looks like a good one to own if the MOSFET market continues to stay healthy.

Disclosure: Long AOSL