Chip maker NXP Semiconductors (NXPI) is advancing 5% today after Japanese bank Mizuho maintained an Outperform rating on the company in the wake of its fourth-quarter results.

However, Mizuho did lower its price target on NXPI, which reported its Q4 results on Monday, to $240 from $260. Also noteworthy is that NXPI specializes in making chips for automobiles.

A close up of a circuit board, its microchips creating a powerful computing system.

Why Mizuho Remains Bullish on NXPI

The bank expects NXP's prices to drop by low single-digit percentage levels this year, and it predicts that auto production will fall by about 5% during the current quarter versus Q4.

On a positive note, Mizuho believes that NXPI's customers have almost utilized all of their excess inventories at this point, while the company's industrial business could be boosted by improving trends among its Asian customers.

What's more, the bank thinks that NXPI is well-positioned to recover in general in the second half of this year, due to positive trends in the auto and industrial spaces.

More Information About NXPI

Analysts on average expect NXP's EPS to drop to $11.93 this year from $13.09 in 2024.

In the last month, NXPI stock has risen 1.5%, while it's down 8% in the last three months.

While we acknowledge the potential of NXPI, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NXPI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.