Back to top

Image: Bigstock

Semiconductor ETFs Sizzling Ahead of Q3 Earnings

Read MoreHide Full Article

The semiconductor corner of the broad tech space has been an investor favorite lately on the stay-at-home trend given the resurgence in the coronavirus pandemic. This has bolstered the demand for gaming chips and data center business. The wave of deal activities is adding to the strength.

iShares PHLX Semiconductor ETF (SOXX - Free Report) , VanEck Vectors Semiconductor ETF (SMH - Free Report) and First Trust NASDAQ Semiconductor ETF (FTXL - Free Report) have gained in double digits each in a month. This upward trend might continue going into the earnings season (read: Here's Why Semiconductor ETFs Are Rallying).  

Some well-known players in the space like Texas Instruments (TXN - Free Report) , Intel (INTC - Free Report) , Qualcomm (QCOM - Free Report) , NVIDIA (NVDA - Free Report) and Advanced Micro Devices Inc. (AMD - Free Report) 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 Q3 earnings unfold. SOXX is largely concentrated on five firms with a combined share of 35.3% followed by 31.5% for FTXL and 28.2% for SMH.

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 Oct 20, after market close. It has a Zacks Rank #3 and an Earnings ESP of +4.12%. The stock saw positive 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 26.6%, on average. The stock has a VGM Score of B.

Intel is slated to release earnings after market close on Oct 22. It has a Zacks Rank #2 and an Earnings ESP of +0.00%. The stock saw no earnings estimate revision activity over the past 7 days for the to-be-reported quarter and delivered a surprise of 15.30%, on average, over the preceding four quarters. It has a solid VGM Score of B (see: all the Technology ETFs here).

Qualcomm has a Zacks Rank #3 and an Earnings ESP of -11.14%. The stock witnessed positive earnings estimate revision of a penny over the past 30 days for the to-be-reported quarter and delivered a surprise of 14.29% in the trailing four quarters, on average. It has a VGM Score of B. The company is expected to report earnings after the closing bell on Nov 4.

NVIDIA, expected to report on Nov 12, has a Zacks #3 and an Earnings ESP of +1.75%. The company delivered earnings surprise of 8.45%, on average, over the past four quarters. It saw positive earnings estimate revision of a penny over the past 7 days for the quarter to be reported. The stock has a VGM Score of C.

Advanced Micro Devices has a Zacks Rank #3 and an Earnings ESP of +1.30%. Its earnings surprise history over the preceding four quarters has been impressive, with the beat being 4.79%, 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 C and is slated to report earnings on Nov 3 (read: ETFs in Focus on AMD-Xilinx Deal Talks).

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.

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>