Semiconductor ETFs Continue to Shine as Q2 Earnings Unfold

The semiconductor corner of the broad tech space has bounced back sharply from the first-quarter lows with stocks logging in the best quarterly performance since the tech bubble in the early 2000s. This is because chip stocks have shown strong resilience amid the coronavirus pandemic on stay-at-home orders, which bolstered demand for gaming chips and data center business (see: all the Technology ETFs here).

iShares PHLX Semiconductor ETF SOXX, VanEck Vectors Semiconductor ETF SMH and First Trust NASDAQ Semiconductor ETF FTXL were up more than 30% each in a month. This upward trend might continue going into the earnings season. 

Some well-known players in the space like Texas Instruments TXN, Intel INTC, Qualcomm QCOM, NVIDIA NVDA and Advanced Micro Devices Inc. AMD will report earnings in the coming days. Let’s delve into the financial picture of the companies that have higher allocation in the above-mentioned ETFs and the power to move the funds up or down as Q2 earnings unfold. SOXX is largely concentrated on five firms with a combined share of 34.8% followed by 31.7% for SMH and 20.9% for FTXL (read: Chip ETF Posts Best Q2: 5 Stocks That Led the Way).

Per our proven model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Inside Our Earnings Prediction

Texas Instruments is set to report on Jul 21, after market close. It has a Zacks Rank #2 and an Earnings ESP of +6.19%. The stock saw negative earnings estimate revision of a penny over the past 7 days for the to-be-reported quarter. Analysts raising estimates right before earnings — with the most up-to-date information possible — is a good indicator for the stock. The earnings surprise track over the last four quarters has been good, with the beat being 11.2%, on average. The stock has a VGM Score of C.

Intel is slated to release earnings after market close on Jul 23. It has a Zacks Rank #2 and an Earnings ESP of +3.13%. The stock saw negative earnings estimate revision of a penny over the past 7 days for the to-be-reported quarter and delivered a surprise of 17.37%, on average, over the preceding four quarters. It has a top VGM Score of A.

Qualcomm has a Zacks Rank #3 and an Earnings ESP of 0.00%. The stock witnessed no earnings estimate revision activity over the past 30 days for the to-be-reported quarter and delivered surprise of 10.75% in the trailing four quarters, on average. It has a VGM Score of A. The company is expected to report earnings after the closing bell on Jul 29.

NVIDIA, expected to report on Aug 20, is a Zacks #3 Ranked player with an Earnings ESP of -6.86%. The company delivered earnings surprise of 10.40%, on average, over the past four quarters. However, it saw negative earnings estimate revision of 3 cents over the past 7 days for the quarter to be reported. The stock has a VGM Score of D (read: Nvidia Tops Intel by Market Cap: ETFs to Buy).

Advanced Micro Devices has a Zacks Rank #1 and an Earnings ESP of 0.00%. Its earnings surprise history over the preceding four quarters has been impressive, with the beat being 1.67%, on average. The stock witnessed no earnings estimate revision of over the past 7 days for the quarter to be reported. The company has a VGM Score of F and is slated to report earnings on Jul 28.

Conclusion

As most companies in this space have a favorable Zacks Rank, semiconductor ETFs might continue to see smooth trading in the weeks ahead. Further, SOXX, SMH and FTXL have a Zacks ETF Rank #1 or 2, suggesting their outperformance (read: Chip ETFs in Focus on Analog Devices Deal to Buy Maxim).

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NVIDIA Corporation (NVDA): Free Stock Analysis Report
 
Intel Corporation (INTC): Free Stock Analysis Report
 
Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report
 
QUALCOMM Incorporated (QCOM): Free Stock Analysis Report
 
Texas Instruments Incorporated (TXN): Free Stock Analysis Report
 
iShares PHLX Semiconductor ETF (SOXX): ETF Research Reports
 
VanEck Vectors Semiconductor ETF (SMH): ETF Research Reports
 
First Trust NASDAQ Semiconductor ETF (FTXL): ETF Research Reports
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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