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Chip ETFs May Shine in Q1 Earnings

Sweta Killa

The semiconductor corner of the broad tech space remained hot amid coronavirus crisis driven by strong demand for memory chips and other semiconductor products. In particular, stay-at-home and social distancing policies to contain the spread have raised the demand for data center and gaming (read: Rising Work-From-Home Trend to Boost 5 Industries & ETFs).

iShares PHLX Semiconductor ETF SOXX, VanEck Vectors Semiconductor ETF SMH and First Trust NASDAQ Semiconductor ETF FTXL were up more than 25% 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 weeks. 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 Q1 earnings unfold. SOXX is largely concentrated on five firms with a combined share of 40.1% followed by 32.9% for SMH and 18.9% for FTXL (read: Stocks Look Set for a Rally: Top-Ranked ETFs to Buy).

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 Apr 21, after market close. It has a Zacks Rank #3 and an Earnings ESP of -1.21%. The Zacks Consensus Estimate for first-quarter earnings has been revised downward by a couple of cents over the past 30 days. The earnings surprise track over the last four quarters has been good, with the beat being 7.51%, on average. The stock has a VGM Score of C.

Intel is slated to release earnings after market close on Apr 23. It has a Zacks Rank #3 and an Earnings ESP of -2.41%. The stock saw negative earnings estimate revision of a couple of cents over the past 30 days for the to-be-reported quarter and delivered a positive surprise of 14.63%, 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 -10.76%. The stock witnessed negative earnings estimate revision of 4 cents over the past 30 days for the yet-to-be-reported quarter and came up with positive surprise of 10.01% in the trailing four quarters. It has a VGM Score of F. The company is expected to report earnings after the closing bell on Apr 29 (see: all the Technology ETFs here).

NVIDIA, expected to report on May 21, is a Zacks #3 Ranked player and has an Earnings ESP of -0.80%. The company delivered positive earnings surprise of 10.60%, on average, over the past four quarters. It saw positive earnings estimate revision of a couple of cents over the past month for the to-be-reported quarter. The stock has a VGM Score of C.

Advanced Micro is a #3 Ranked player and has an Earnings ESP of 0.00%. Its earnings surprise history over the preceding four quarters has been impressive, the beat being 6.67%, on average. The stock witnessed no earnings estimate revision of over the past 30 days for the quarter to be reported. The company has a VGM Score of B and is slated to report earnings on May 5.

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, suggesting their outperformance.

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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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