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What's in Store for Chip ETFs This Earnings Season?

Sweta Killa
·4 min read

The semiconductor corner of the broad tech space has been riding high on with the acceleration in e-commerce for almost everything, ranging from remote working to entertainment and shopping. Additionally, the ongoing shortage is a big tailwind for the chip industry.

As such, iShares PHLX Semiconductor ETF SOXX, VanEck Vectors Semiconductor ETF SMH and First Trust NASDAQ Semiconductor ETF FTXL have gained about 12%, 11% and 6.9%, respectively. This upward trend might continue going into the earnings season (read: Why Semiconductor ETFs Are Soaring).  

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 Q1 earnings unfold. SOXX is largely concentrated on five firms with a combined share of 37% followed by 28.2% for SMH and 13% for FTXL.

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

Intel is slated to release earnings after market close on Apr 22. It has a Zacks Rank #4 and an Earnings ESP of +0.22%. The stock saw positive earnings estimate revision of 4 cents over the past 30 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. Intel delivered a surprise of 15.80%, on average, for the preceding four quarters.

Texas Instruments is set to report on Apr 27, after market close. It has a Zacks Rank #2 and an Earnings ESP of +4.25%. The stock saw no earnings estimate revision over the past 30 days for the to-be-reported quarter. The earnings surprise track over the last four quarters has been good, with the beat being 34.86%, on average.

Qualcomm has a Zacks Rank #3 and an Earnings ESP of 0.00%. The stock witnessed no earnings estimate revision over the past 30 days for the to-be-reported quarter and delivered an earnings surprise of 14% in the trailing four quarters, on average. The company is expected to report earnings after the closing bell on Apr 28 (see: all the Technology ETFs here).

NVIDIA, expected to report on May 20, has a Zacks #1 and an Earnings ESP of +2.51%. The company delivered an earnings surprise of 10.71%, on average, over the past four quarters. It saw positive earnings estimate revision of 4 cents over the past 30 days for the quarter to be reported.

Advanced Micro Devices has a Zacks Rank #2 and an Earnings ESP of -0.32%. Its earnings surprise history is impressive, with the average beat being 9.26% for the preceding four quarters. The stock witnessed no earnings estimate revision over the past 30 days for the quarter to be reported. The company is slated to report earnings on Apr 27 after the closing bell (read: March Retail Sales Sparkles: Industry ETFs & Stocks to Win).

Conclusion

As most companies in this space are expected to beat on earnings and have seen positive earnings estimate revision activity, 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.

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ISHARS-PHLX SEM (SOXX): ETF Research Reports
 
VANECK-SEMICON (SMH): ETF Research Reports
 
FT-NDQ SEMICON (FTXL): ETF Research Reports
 
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