|What Lies Ahead for Semiconductor ETFs in Q1 Earnings?|
April 18, 2022
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The semiconductor space has been seeing huge investor interest this year amid the weakness in stock prices. Investors are betting that the industry will rebound from the supply-chain hitches and chip shortages that have dragged the stocks lower.
As such, iShares Semiconductor ETF SOXX, VanEck Vectors Semiconductor ETF SMH and First Trust NASDAQ Semiconductor ETF FTXL have plunged nearly 23% each this year. The weak trend might reverse in the weeks ahead, in the earnings season.
Even though semiconductor stocks have been beaten down this year, the industry fundamentals have remained strong as supply chains are being reorganized and demand for chips remains solid. Global chip sales hit a record of $555.9 billion, up 26.2% year over year, in 2021 and are expected to grow 8.8% in 2022, per the Semiconductor Industry Association (read: Semiconductor ETFs Enjoying Huge Investors Love).
Some well-known players in the space like Texas Instruments TXN, Intel INTC, Qualcomm QCOM, NVIDIA NVDA and Advanced Micro Devices AMD will report earnings in the coming days. Let’s delve into the financial picture of the companies that have a higher allocation in the above-mentioned ETFs and the power to move the funds up or down as Q1 earnings unfold. SOXX is largely concentrated on five firms with a combined share of 31.2%, followed by 29.8% for SMH and 25.6% for FTXL.
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 Apr 26, after market close. It has a Zacks Rank #4 and an Earnings ESP of 0.00%. The stock saw no earnings estimate revision over the past 30 days for the to-be-reported quarter. The earnings surprise track over the last four quarters has been good, with the beat being 12.35%, on average.
Intel is slated to release earnings after market close on Apr 28. It has a Zacks Rank #3 and an Earnings ESP of 0.00%. The stock saw no earnings estimate revision over the past 30 days for the to-be-reported quarter. Intel delivered an earnings surprise of 29.20%, on average, for the preceding four quarters.
Qualcomm has a Zacks Rank #4 and an Earnings ESP of +0.15%. The stock witnessed no earnings estimate revision over the past 30 days for the to-be-reported quarter and delivered an earnings surprise of 12.22% in the trailing four quarters, on average. The company is expected to report earnings after the closing bell on Apr 27 (see: all the Technology ETFs here).
NVIDIA, expected to report on May 25, has a Zacks Rank #2 and an Earnings ESP of +0.00%. The company delivered an earnings surprise of 7.04%, on average, over the past four quarters. It saw negative earnings estimate revision of a penny over the past 30 days for the quarter to be reported.
Advanced Micro Devices has a Zacks Rank #3 and an Earnings ESP of 0.00%. Its earnings surprise history is impressive, with the average beat being 17.03% for the preceding four quarters. The stock witnessed no earnings estimate revision over the past 30 days for the quarter to be reported. The company is slated to report earnings on May 3 after the closing bell (read: 5 Top-Ranked ETFs That Can Shine Bright in April).
Semiconductor ETFs might see smooth trading in the weeks ahead as SOXX, SMH and FTXL have a Zacks ETF Rank #1 or #2. This suggests that the beaten-down price might be a good entry point.
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