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Semiconductor ETFs Look Solid Going Into Q4 Earnings

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The semiconductor corner of the broad tech space has been riding high lately as a surge in coronavirus infection once again led to lockdowns and social distancing measures. This has bolstered the demand for gaming chips and data center business.

As such, 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 about 13% each in a month. This upward trend might continue going into the earnings season (read: 5 Top-Ranked ETFs That Investors Can Bet On).  

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 Q4 earnings unfold. SOXX is largely concentrated on five firms with a combined share of 33.4% followed by 32.9% for FTXL and 25.1% 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

Intel is slated to release earnings after market close on Jan 21. It has a Zacks Rank #3 and an Earnings ESP of +0.00%. The stock saw no earnings estimate revision activity over the past 30 days for the to-be-reported quarter and delivered a surprise of 11.90%, on average, over the preceding four quarters.

Texas Instruments is set to report on Jan 26, after market close. It has a Zacks Rank #3 and an Earnings ESP of +1.77%. The stock saw positive earnings estimate revision of a couple of 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. The earnings surprise track over the last four quarters has been good, with the beat being 28.73%, on average.

Qualcomm has a Zacks Rank #2 and an Earnings ESP of -0.76%. The stock witnessed no earnings estimate revision over the past 30 days for the to-be-reported quarter and delivered a surprise of 17.29% in the trailing four quarters, on average. The company is expected to report earnings after the closing bell on Feb 3 (see: all the Technology ETFs here).

NVIDIA, expected to report on Feb 2, has a Zacks #3 and an Earnings ESP of +0.21%. The company delivered earnings surprise of 11.49%, on average, over the past four quarters. It saw no earnings estimate revision over the past 30 days for the quarter to be reported.

Advanced Micro Devices has a Zacks Rank #3 and an Earnings ESP of +2.07%. Its earnings surprise history over the preceding four quarters has been impressive, with the beat being 8.27%, on average. The stock witnessed positive earnings estimate revision of a penny over the past 30 days for the quarter to be reported. The company is slated to report earnings on Jan 26 after the closing bell (read: Can Semiconductor Stocks & ETFs Keep Soaring in 2021?).

Conclusion

As most companies in this space are expected to beat earnings, 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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