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Spate of Solid Q2 Earnings Fuel Semiconductor ETFs

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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 reported earnings per share of $2.05, easily surpassing the Zacks Consensus Estimate by 23 cents and improving 39% from the year-ago quarter. Revenues increased 41% year over year to $4.6 billion and edged past the consensus mark of $4.33 billion. For the ongoing third quarter, the company expects revenues in the range of $4.40-$4.76 billion and earnings per share of $1.87-$2.13.

Lam Research also topped earnings and revenue estimates in fourth-quarter fiscal 2021. Earnings per share of $8.09 surpassed the Zacks Consensus Estimate of $7.53. Revenues of $4.1 billion edged past the consensus mark of $4 billion. On year-over-year basis, earnings and revenues are up 69.2% and 48.5%, respectively. For first-quarter fiscal 2022, the company expects revenues in the range of $4.3 billion (+/- $250 million) and earnings per share of $8.10 (+/- 50 cents).

Intel, the world’s largest chipmaker, also smashed estimates for both earnings and revenues. Earnings of $1.28 per share came above the Zacks Consensus Estimate of $1.06 and improved from the year-ago earnings of $1.23. Revenues increased 2% year over year to $18.53 billion and exceeded the estimated $17.73 billion. Intel expects revenues of about $19.1 billion and earnings per share of $1.10 for the third quarter of 2021. For the full year, the company raised its revenue outlook from $72.5 billion to $73.5 billion while reiterated its earnings per share guidance of $4.80 (read: Intel Q2 Earnings Put These ETFs in Focus).

At Qualcomm, earnings per share of $1.92 for third quarter fiscal 2021 surpassed the Zacks Consensus Estimate by 25 cents while revenues of $7.99 billion edged past the estimate of $7.58 billion. The company guided GAAP revenues of $8.4-$9.2 billion and non-GAAP earnings per share of $2.15-$2.35 for the fourth quarter of fiscal 2021.

Advanced Micro Devices reported earnings per share of 63 cents, surpassing the Zacks Consensus Estimate by 16.7% and soaring 250% year over year. Revenues surged 99% to $3.85 billion exceeding the consensus mark by $250 million. It expects third-quarter revenues of $4.1 billion (+/-$100 million), indicating year-over-year and quarter-over-quarter growth of 46% and 6%, respectively. For 2021, AMD projects revenues to grow 60% year over year, much better than previous expectation of 50% growth.

ETFs in Focus

Impressive results of these chipmakers have pushed semiconductor ETFs higher over the past month. Investors seeking to make the most of the surging space in a diversified way could consider the following ETFs.

iShares Semiconductor ETF (SOXX - Free Report)

This ETF follows the ICE Semiconductor Index and offers exposure to 30 firms. The in-focus five firms account for a combined 26.5% share in the basket. The fund has amassed $7.5 billion in its asset base and trades in solid average volume of around 743,000 shares a day. It charges 43 bps in fees a year from investors and has gained 4.8% in the past month. It has a Zacks ETF Rank #2 (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 make up for nearly 5% share each. The product has managed assets worth $6.1 billion and charges 35 bps in annual fees and expenses. It is heavily traded with a volume of around 3.1 million shares per day and has gained 4.5% in the same time frame. The fund has a Zacks ETF Rank #3 (Hold) with a High risk outlook (read: Semiconductor ETF Hits New 52-Week High).

Invesco Dynamic Semiconductors ETF (PSI - Free Report)

This fund tracks the Dynamic Semiconductor Intellidex Index, holding 31 securities in its basket. The in-focus firms collectively make up for 25.3% of the total assets. The product has AUM of $131.6 million and sees a moderate average daily volume of 38,000 shares. Expense ratio is 0.57%. PSI has gained 6.1% in the same time frame and has a Zacks ETF Rank #3 with a High risk outlook.

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 30 stocks in its basket, the in-focus firms collectively make up for 18.7% of assets. FTXL has accumulated $76.3 million in AUM. The average trading volume is light at around 11,000 shares and expense ratio is 0.60%. FTXL is up 5.5% over the past month and has a Zacks ETF Rank #3.

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

This fund tracks the S&P Semiconductor Select Industry Index, holding 41 stocks in its portfolio with the in-focus firms making up for not more than 3.2% share each. The fund is less popular with AUM of $1 billion and an average daily volume of about 58,000 shares. It charges 35 bps in fees per year and has risen 5.9% over the past month. The product has a Zacks ETF Rank #2 with a High risk outlook.