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Semiconductor ETFs Flying High on Slew of Q3 Earnings Beat

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The semiconductor space has been on a tear as the pandemic has bolstered the demand for chips, leading to the worst global shortage in many years. This is especially true as global semiconductors sales jumped 27.6% year over year to $144.8 billion in Q3, up from 7.4% growth recorded in Q2, according to the Semiconductor Industry Association (“SIA”).

Semiconductor shipments reached all-time highs in the third quarter of 2021, indicating the ongoing high global demand for chips and the industry’s extraordinary efforts to ramp up production to meet that demand. A spate of earnings beat has been acting as an icing on the cake, injecting further optimism into the space (read: Here's Why Semiconductor ETFs Are Looking Attractive for Q4).

Let’s dig into earnings of some 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 (AMD - Free Report) :

Semiconductor Earnings in Focus

Texas Instruments reported earnings per share of $2.07, easily surpassing the Zacks Consensus Estimate by 0.5% and improving 43% from the year-ago quarter. Revenues increased 22% year over year to $4.64 billion but fell short of the consensus mark of $4.69 billion. For the ongoing fourth quarter, the company expects revenues in the range of $4.22-$4.58 billion and earnings per share of $1.83-$2.07.

Lam Research also topped earnings estimates but missed on revenues in first-quarter fiscal 2022. Earnings per share of $8.36 surpassed the Zacks Consensus Estimate of $8.13. Revenues of $4.305 billion fell marginally shy of the consensus mark of $4.305 billion. On a year-over-year basis, earnings and revenues are up 47.4% and 35.5%, respectively. For second-quarter fiscal 2022, the company expects revenues in the range of $4.4 billion (+/- $250 million) and earnings per share of $8.45 (+/- 50 cents).

Intel, the world’s largest chipmaker, also smashed estimates for earnings. Earnings of $1.71 per share came above the Zacks Consensus Estimate of $1.11 and improved from the year-ago earnings of $1.08. Revenues were up 5% year over year at $18.1 billion but were slightly below the estimated $18.2 billion. Intel expects revenues of about $18.3 billion and earnings per share of 90 cents for the fourth quarter of 2021. For the full year, the company projects revenues of approximately $73.5 billion and earnings per share of $5.28 (read: Intel Q3 Earnings Put These ETFs in Focus).

At Qualcomm, earnings per share of $2.55 for fourth quarter fiscal 2021 surpassed the Zacks Consensus Estimate by 29 cents while revenues of $9.32 billion edged past the estimate of $8.88 billion. The company guided GAAP revenues of $10-$10.8 billion and non-GAAP earnings per share of $2.90-$3.10 for the first quarter of fiscal 2022.

Advanced Micro Devices reported earnings per share of 73 cents, surpassing the Zacks Consensus Estimate by 10.6% and soaring 78% year over year. Revenues surged 54% to $4.31 billion, exceeding the consensus mark by 4.7%. It expects fourth-quarter revenues of $4.5 billion (+/-$100 million), indicating year-over-year and quarter-over-quarter growth of 39% and 4%, respectively. For 2021, AMD projects revenues to grow 65% year over year, much better than previous expectation of 60% growth (see: all the Technology ETFs here).

ETFs in Focus

Impressive results of these chipmakers have pushed semiconductor ETFs to new highs. 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% share in the basket. The fund has amassed $8.9 billion in its asset base and trades in a solid average volume of around 856,000 shares a day. It charges 43 bps in fees a year from investors and has gained 18.8% in the past month. It has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook (read: Tech Tops the Winners List of Past Decade: Best ETFs).

Invesco PHLX Semiconductor ETF (SOXQ - Free Report)

This fund tracks the PHLX Semiconductor Sector Index, holding 30 stocks in its basket with the in-focus firms making up for a 30.7% share in the basket. SOXQ debuted in the space in June and has accumulated $68.2 million in its asset base. It came up with zero fees and trades in an average daily volume of 25,000 shares.

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 4% share each. The product has managed assets worth $6.9 billion and charges 35 bps in annual fees and expenses. It is heavily traded with a volume of around 3 million shares per day and has gained 19.2% in the same time frame. The fund has a Zacks ETF Rank #1 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 23.4% of assets. FTXL has accumulated $95.4 million in AUM. The average trading volume is light at around 12,000 shares and the expense ratio is 0.60%. FTXL has added 15.4% over the past month and has a Zacks ETF Rank #1.

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

This fund tracks the S&P Semiconductor Select Industry Index, holding 40 stocks in its portfolio with the in-focus firms making up for not more than 3% share each. The fund is less popular with AUM of $1.4 billion and an average daily volume of about 68,000 shares. It charges 35 bps in fees per year and has risen 23.5% in a month. The product has a Zacks ETF Rank #1 with a High risk outlook (read: 5 Top-Ranked ETFs Outperforming to Start November).