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After struggling in recent weeks due to rising rate worries, the semiconductor space bounced back last week. There are now signs of the Federal Reserve's aggressive interest rate hiking campaign nearing an end. And the demand for artificial intelligence (AI) applications is extremely high. As a result, several chip ETFs have been hovering around a one-month high. Apart from Fed hopes, a few chip companies’ results and outlook have come in upbeat. Let’s delve a little deeper.
Inside the Rally
Taiwan Semiconductor (TSM - Free Report) shares have jumped 6.4% on Nov 10 as the company announced impressive financial results for October, with a solid 34.8% increase in net revenue compared to the previous month. Consolidated sales for October reached around NT$243.20 billion (US$7.53 billion), marking a considerable 34.8% uptick from September and a prominent 15.7% year-over-year rise. The extraordinary growth can be attributed to the strong demand for TSMC’s cutting-edge chip process.
Going forward, TSMC has projected consolidated sales for the fourth quarter of this year to remain between US$18.8 billion and US$19.6 billion. The median figure of US$19.2 billion represents a substantial 11.1% sequential increase. These projections indicate the company’s continued success in meeting the growing demand for advanced chip technology. Overall, TSMC's outstanding October results and positive sales outlook for the upcoming months underscore its leading role in the semiconductor sector.
Simultaneously, TSMC client Broadcom saw a rise despite ongoing VMware acquisition delays, benefiting from AI acceleration through its data center switching and routing platforms, increasingly adopted for rapid connections in AI training clusters, as quoted on Motley Fool. Here’s not end. Advanced Micro Devices (AMD - Free Report) 's CEO Lisa Su forecasts the new MI300 AI accelerator to generate $400 million in Q4 revenue, with expectations of exceeding $2 billion in sales next year. AMD stock jumped 4.5% on Nov 10.
VanEck Vectors Semiconductor ETF provides exposure to 26 companies involved in semiconductor production and equipment by tracking the MVIS US Listed Semiconductor 25 Index. It has managed assets worth $10 billion and charges 35 bps in annual fees and expenses. The in-focus five firms account for 23% share in the basket.
VanEck Vectors Semiconductor ETF is heavily traded, with a volume of around 8.4 million shares per day. It has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook. SMH ETF was up 4.1% on Nov 10, 2013.
iShares Semiconductor ETF follows the NYSE Semiconductor Index and offers exposure to U.S. companies that design, manufacture and distribute semiconductors. It holds 30 securities in its basket, with the in-focus five firms collectively making up 30.5% of the assets.
iShares Semiconductor ETF has amassed $8.7 billion in its asset base and trades in a volume of about 820,000 shares a day. The product charges a fee of 35 bps a year from investors and has a Zacks ETF Rank #1 with a High risk outlook. The fund gained more than 4% on Nov 10.
Invesco PHLX Semiconductor ETF tracks the PHLX Semiconductor Sector Index, holding 30 stocks in its basket. The in-focus five firms collectively make up a combined 33.9% share in the basket. Invesco PHLX Semiconductor ETF has accumulated $146.5 million in its asset base. It charges 19 bps in annual fees and trades in an average daily volume of 50,000 shares. The fund gained about 3.9% on Nov 10, 2023. The fund was up 3.9% on Nov 10.
First Trust Nasdaq Semiconductor ETF offers exposure to the most-liquid U.S. semiconductor securities based on volatility, value and growth by tracking the Nasdaq US Smart Semiconductor Index. FTXL holds 32 stocks in its basket, with in-focus five firms accounting for a combined 34.4% share.
First Trust Nasdaq Semiconductor ETF has accumulated $1 billion in AUM. The average trading volume is light at around 62,000 shares and the expense ratio is 0.60%. FTXL has a Zacks ETF Rank #1. The fund rose 4% on Nov 10.
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Inside the Recent Surge in Semiconductor ETFs
After struggling in recent weeks due to rising rate worries, the semiconductor space bounced back last week. There are now signs of the Federal Reserve's aggressive interest rate hiking campaign nearing an end. And the demand for artificial intelligence (AI) applications is extremely high. As a result, several chip ETFs have been hovering around a one-month high. Apart from Fed hopes, a few chip companies’ results and outlook have come in upbeat. Let’s delve a little deeper.
Inside the Rally
Taiwan Semiconductor (TSM - Free Report) shares have jumped 6.4% on Nov 10 as the company announced impressive financial results for October, with a solid 34.8% increase in net revenue compared to the previous month. Consolidated sales for October reached around NT$243.20 billion (US$7.53 billion), marking a considerable 34.8% uptick from September and a prominent 15.7% year-over-year rise. The extraordinary growth can be attributed to the strong demand for TSMC’s cutting-edge chip process.
Going forward, TSMC has projected consolidated sales for the fourth quarter of this year to remain between US$18.8 billion and US$19.6 billion. The median figure of US$19.2 billion represents a substantial 11.1% sequential increase. These projections indicate the company’s continued success in meeting the growing demand for advanced chip technology. Overall, TSMC's outstanding October results and positive sales outlook for the upcoming months underscore its leading role in the semiconductor sector.
Simultaneously, TSMC client Broadcom saw a rise despite ongoing VMware acquisition delays, benefiting from AI acceleration through its data center switching and routing platforms, increasingly adopted for rapid connections in AI training clusters, as quoted on Motley Fool. Here’s not end. Advanced Micro Devices (AMD - Free Report) 's CEO Lisa Su forecasts the new MI300 AI accelerator to generate $400 million in Q4 revenue, with expectations of exceeding $2 billion in sales next year. AMD stock jumped 4.5% on Nov 10.
ETFs in Focus
VanEck Vectors Semiconductor ETF (SMH - Free Report)
VanEck Vectors Semiconductor ETF provides exposure to 26 companies involved in semiconductor production and equipment by tracking the MVIS US Listed Semiconductor 25 Index. It has managed assets worth $10 billion and charges 35 bps in annual fees and expenses. The in-focus five firms account for 23% share in the basket.
VanEck Vectors Semiconductor ETF is heavily traded, with a volume of around 8.4 million shares per day. It has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook. SMH ETF was up 4.1% on Nov 10, 2013.
iShares Semiconductor ETF (SOXX - Free Report)
iShares Semiconductor ETF follows the NYSE Semiconductor Index and offers exposure to U.S. companies that design, manufacture and distribute semiconductors. It holds 30 securities in its basket, with the in-focus five firms collectively making up 30.5% of the assets.
iShares Semiconductor ETF has amassed $8.7 billion in its asset base and trades in a volume of about 820,000 shares a day. The product charges a fee of 35 bps a year from investors and has a Zacks ETF Rank #1 with a High risk outlook. The fund gained more than 4% on Nov 10.
Invesco PHLX Semiconductor ETF (SOXQ - Free Report)
Invesco PHLX Semiconductor ETF tracks the PHLX Semiconductor Sector Index, holding 30 stocks in its basket. The in-focus five firms collectively make up a combined 33.9% share in the basket. Invesco PHLX Semiconductor ETF has accumulated $146.5 million in its asset base. It charges 19 bps in annual fees and trades in an average daily volume of 50,000 shares. The fund gained about 3.9% on Nov 10, 2023. The fund was up 3.9% on Nov 10.
First Trust Nasdaq Semiconductor ETF (FTXL - Free Report)
First Trust Nasdaq Semiconductor ETF offers exposure to the most-liquid U.S. semiconductor securities based on volatility, value and growth by tracking the Nasdaq US Smart Semiconductor Index. FTXL holds 32 stocks in its basket, with in-focus five firms accounting for a combined 34.4% share.
First Trust Nasdaq Semiconductor ETF has accumulated $1 billion in AUM. The average trading volume is light at around 62,000 shares and the expense ratio is 0.60%. FTXL has a Zacks ETF Rank #1. The fund rose 4% on Nov 10.