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Semiconductor ETFs Roaring to New Highs on Solid Earnings

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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 - Free Report) , Lam Research Corporation (LRCX - Free Report) , Intel (INTC - Free Report) , Qualcomm (QCOM - Free Report) and Advanced Micro Devices, Inc. (AMD - Free Report) spread optimism in the sector (see: all the Technology ETFs here).

Let’s take a look into the individual performances:

Semiconductor Earnings in Focus

Texas Instruments topped the Zacks Consensus Estimate by 60 cents for earnings and $277 million for revenues. For the ongoing third quarter, the company expects revenues in the range of $3.26-$3.54 billion and earnings per share of $1.14-$1.34. The Zacks Consensus Estimate of $2.97 billion for revenues and 91 cents for earnings at the time of earnings release is higher than the midpoint of the respective guidance range.

Lam Research also topped earnings and revenue estimates in fourth-quarter fiscal 2020. Earnings per share of $4.78 surpassed the Zacks Consensus Estimate of $4.20. Revenues of $2.79 billion edged past the consensus mark of $2.73 billion. For first-quarter fiscal 2021, the company expects revenues in the range of $3.1 billion (+/- $200 million) and earnings per share of $5.15 (+/- 40 cents). The Zacks Consensus Estimate at the time of earnings release was pegged at $2.65 billion for revenues and $4.21 for earnings.

Intel, the world’s largest chipmaker, beat earnings and revenue estimates by 12 cents and $1.2 billion, respectively. Intel expects revenues of $18.20 billion and earnings per share of $1.10 for the third quarter of 2020. Although revenue guidance was above the current Zacks Consensus Estimate of $18.04 billion at the time of the earnings release, the earnings forecast falls short of the consensus estimate of $1.16. For the full year, Intel now expects to earn an adjusted $4.85 a share on sales of $75 billion. The Zacks Consensus Estimate was pegged at earnings of $4.80 a share and revenues of $74.01 billion (read: Intel Beats, Guides Lower: ETFs in Focus).

At Qualcomm, earnings per share of 65 cents for third-quarter fiscal 2020 surpassed the consensus estimate of 57 cents while revenues of $4.89 billion edged past the estimate of $4.81 billion. The company guided revenues of $5.5-$6.3 billion and earnings per share of $1.05-$1.25 for the fourth quarter of fiscal 2020.

Advanced Micro Devices outpaced the Zacks Consensus Estimate by a penny while revenues exceeded the consensus mark by $79 million. It expects third-quarter revenues of $2.55 billion (+/-$100 million), indicating year-over-year and quarter-over-quarter growth of 42% and 32%, respectively. The Zacks Consensus Estimate for third-quarter revenues was pegged at $2.31 billion at the time of earnings release. For 2020, AMD projects revenues to grow 32% year over year while the Zacks Consensus Estimate indicates 24.6% annual growth (read: Semiconductor ETFs in Focus as AMD Soars).

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 - Free Report)

This ETF follows the PHLX SOX Semiconductor Sector Index and offers exposure to 30 firms. The in-focus five firms are among the top 10 holdings accounting for a combined 31.8% share in the basket. The fund has amassed $3.4 billion in its asset base and trades in solid average volume of around 682,000 shares a day. It charges 46 bps in fees a year from investors and has gained 7.7% in the past month. It has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook.

VanEck Vectors Semiconductor ETF (SMH - Free Report)

This fund provides exposure to 25 securities by tracking the MVIS US Listed Semiconductor 25 Index. Of these, the in-focus five firms collectively make up for 28.5% share. The product has managed assets worth $2.7 billion and charges 35 bps in annual fees and expenses. It is heavily traded with a volume of around 3.5 million shares per day and has gained 8.8% in the same time frame. The fund has a Zacks ETF Rank #2 (Buy) with a High risk outlook (read: 6 ETF Picks for Historically Downbeat August).

First Trust Nasdaq Semiconductor ETF (FTXL - Free Report)

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 31 stocks in its basket, the in-focus firms collectively make up for 18.4% of assets. FTXL has accumulated $45.9 million in AUM. Average trading volume is light at around 10,000 shares and expense ratio is 0.60%. FTXL is up 6.9% over the past month and has a Zacks ETF Rank #2.

Invesco Dynamic Semiconductors ETF (PSI - Free Report)

This fund tracks the Dynamic Semiconductor Intellidex Index, holding 32 securities in its basket. The in-focus firms collectively make up for 23.2% of the total assets. The product has AUM of $301.5 million and sees moderate average daily volume of 32,000 shares. Expense ratio is 0.58%. PSI has gained 10.1% in the same time frame and has a Zacks ETF Rank #1 with a High risk outlook.

SPDR S&P Semiconductor ETF (XSD - Free Report)

This fund tracks the S&P Semiconductor Select Industry Index, holding 36 stocks in its portfolio with the in-focus firms making up for around 3% share each. The fund is less popular with AUM of $553.5 million and average daily volume of about 54,000 shares. It charges 35 bps in fees per year and has added 8.6% over the past month. The product has a Zacks ETF Rank #1 with a High risk outlook.

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