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Q3 Solid Earnings Push Semiconductor ETFs to New Highs

Semiconductors have taken a lead in the technology segment lately on solid earnings. In particular, a spate of better-than-expected reports from well-known players like Texas Instruments TXN, Lam Research Corporation LRCX, Intel INTC, Qualcomm QCOM and Advanced Micro Devices, Inc. (AMD) spread optimism in the sector (read: Semiconductor ETFs Sizzling Ahead of Q3 Earnings).

Let’s take a look into the individual performances:

Semiconductor Earnings in Focus

Texas Instruments topped the Zacks Consensus Estimate by 18 cents for earnings and $386 million for revenues. For the ongoing fourth quarter, the company expects revenues in the range of $3.41-$3.69 billion and earnings per share of $1.20-$1.40. The guidance was much above the Zacks Consensus Estimate of $3.3 billion for revenues and $1.15 for earnings at the time of earnings release.

Lam Research also topped earnings and revenue estimates in first-quarter fiscal 2021. Earnings per share of $5.67 surpassed the Zacks Consensus Estimate of $5.17. Revenues of $3.2 billion edged past the consensus mark of $3.1 billion. For second-quarter fiscal 2021, the company expects revenues in the range of $3.3 billion (+/- $200 million) and earnings per share of $5.60 (+/- 40 cents). The Zacks Consensus Estimate at the time of earnings release was pegged at $3.08 billion for revenues and $5.09 for earnings (see: all the Technology ETFs here).

Intel, the world’s largest chipmaker, beat earnings and revenue estimates by a penny and $127 million, respectively. Intel expects revenues of $17.4 billion and earnings per share of $1.10 for the fourth quarter of 2020. Both the guided figures were above the current Zacks Consensus Estimate of $17.28 billion for revenues and $1.08 for earnings at the time of the earnings release. For 2020, Intel raised the revenue guidance to $75.3 billion from the previous view of $75 billion while earnings per share are expected to be $4.90, up from $4.85 guided earlier. The Zacks Consensus Estimate was pegged at $4.86 a share for earnings and $75.09 billion for revenues.

At Qualcomm, earnings per share of $1.23 for fourth-quarter fiscal 2020 surpassed the consensus estimate of $1.02 while revenues of $8.34 billion edged past the estimate of $5.93 billion. The company guided revenues of $7.8-$8.6 billion and earnings per share of $1.95-$2.15 for the first quarter of fiscal 2021.

Advanced Micro Devices also outpaced the Zacks Consensus Estimate by 4 cents while revenues exceeded the consensus mark by $244 million. It expects fourth-quarter revenues of $3 billion (+/-$100 million), indicating year-over-year and quarter-over-quarter growth of 41% and 7%, respectively. For 2020, AMD projects revenues to grow 41% year over year, much better than previous expectation of 32% growth (read: ETFs in Focus on AMD-Xilinx Deal Talks).

ETFs in Focus

Impressive results of these chipmakers have pushed semiconductor ETFs higher over the past month. In fact, these funds are hitting new 52-week highs. Investors seeking to make the most of the surging space in a diversified way could consider the following ETFs.

iShares PHLX Semiconductor ETF SOXX

This ETF follows the PHLX SOX Semiconductor Sector Index and offers exposure to 30 firms. The in-focus five firms account for a combined 30.6% share in the basket. The fund has amassed $3.8 billion in its asset base and trades in solid average volume of around 547,000 shares a day. It charges 46 bps in fees a year from investors and has gained 5.6% in the past month. It has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook.

VanEck Vectors Semiconductor ETF SMH

This fund provides exposure to 25 securities by tracking the MVIS US Listed Semiconductor 25 Index. Of these, the in-focus five firms make up for nearly 5% share each. The product has managed assets worth $3 billion and charges 35 bps in annual fees and expenses. It is heavily traded with a volume of around 2.7 million shares per day and has gained 5.5% in the same time frame. The fund has a Zacks ETF Rank #2 (Buy) with a High risk outlook (read: October US Manufacturing About 2-Year Best: 4 Solid ETF Areas).

First Trust Nasdaq Semiconductor ETF FTXL

This fund offers exposure to the most-liquid U.S. semiconductor securities based on volatility, value and growth by tracking the Nasdaq US Smart Semiconductor Index. Holding 30 stocks in its basket, the in-focus firms collectively make up for 27.1% of assets. FTXL has accumulated $53.9 million in AUM. Average trading volume is light at around 10,000 shares and expense ratio is 0.60%. FTXL is up 6.3% over the past month and has a Zacks ETF Rank #1.

Invesco Dynamic Semiconductors ETF PSI

This fund tracks the Dynamic Semiconductor Intellidex Index, holding 31 securities in its basket. The in-focus firms collectively make up for 14.4% of the total assets. The product has AUM of $293.8 million and sees a moderate average daily volume of 21,000 shares. Expense ratio is 0.57%. PSI has gained 9.4% in the same time frame and has a Zacks ETF Rank #1 with a High risk outlook.

SPDR S&P Semiconductor ETF XSD

This fund tracks the S&P Semiconductor Select Industry Index, holding 37 stocks in its portfolio with the in-focus firms making up for around 3% share each. The fund is less popular with AUM of $614 million and average daily volume of about 69,000 shares. It charges 35 bps in fees per year and has added 7.1% over the past month. The product has a Zacks ETF Rank #2 with a High risk outlook.

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Intel Corporation (INTC): Free Stock Analysis Report
 
Lam Research Corporation (LRCX): 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
 
Invesco Dynamic Semiconductors ETF (PSI): ETF Research Reports
 
VanEck Vectors Semiconductor ETF (SMH): ETF Research Reports
 
SPDR SP Semiconductor ETF (XSD): ETF Research Reports
 
First Trust NASDAQ Semiconductor ETF (FTXL): ETF Research Reports
 
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