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The semiconductor stocks and ETFs have been rising this year on growing optimism that a sales downturn in the industry has reached its lowest point, in part due to a surge in artificial intelligence (AI) technology. Additionally, fears of recession and financial instability have compelled investors to flock to safe value companies that are old, have cash-rich balance sheets and durable revenue streams.
Semiconductors have been the most important drivers of the overall growth in technology, given the use of chips in day-to-day life, from cars, to electronic gadgets, to planes and weapons. The demand will continue to trend higher given the increased digitization in various corners like healthcare, transport, financial systems, defense, agriculture and retail, among others.
The rapid adoption of cutting-edge technology like cloud, Internet of Things, autonomous cars, gaming, wearables, VR headsets, drones, virtual reality devices, AI, cryptocurrencies, 5G and other advanced information technologies should continue to fuel growth. Further, the introduction of expensive and new-generation chips has been leading to an enhancement in the product mix for semiconductors.
Some other well-known players in the space, such as Intel (INTC - Free Report) , Qualcomm (QCOM - Free Report) , NVIDIA (NVDA - Free Report) and Advanced Micro Devices (AMD - Free Report) , 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. SOXQ is largely concentrated on four firms with a combined share of 30.2%, followed by 29.2% for SMH, 26.4% for SOXX and 21.6% 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
Intel is slated to release earnings after market close on Apr 27. It has a Zacks Rank #4 and an Earnings ESP of -3.01%. The stock saw negative earnings estimate revision of a penny over the past 30 days for the to-be-reported quarter. Intel delivered a negative earnings surprise of 6.42%, on average, for the preceding four quarters.
Qualcomm has a Zacks Rank #3 and an Earnings ESP of -1.10%. The stock witnessed no earnings estimate revision over the past 30 days for the to-be-reported quarter and delivered an earnings surprise of 3.75% in the trailing four quarters, on average. The company is expected to report earnings after the closing bell on May 3 (see: all the Technology ETFs here).
NVIDIA, expected to report on May 24, has a Zacks Rank #2 and an Earnings ESP of 0.00%. The company delivered a negative earnings surprise of 3.20%, on average, over the past four quarters. It saw no earnings estimate revision over the past 30 days for the quarter to be reported (read: 5 Tech Stocks That Powered Nasdaq ETF in the First Quarter).
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 2.81% 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 2 after the closing bell.
Conclusion
Though the companies do not expect to surprise on earnings this season, semiconductor ETFs might see smooth trading in the weeks ahead as SOXX, SMH and FTXL have a Zacks ETF Rank #2 or 3. This suggests their strong performance in the weeks ahead.
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Semiconductor ETFs in Focus Ahead of Q1 Earnings
The semiconductor stocks and ETFs have been rising this year on growing optimism that a sales downturn in the industry has reached its lowest point, in part due to a surge in artificial intelligence (AI) technology. Additionally, fears of recession and financial instability have compelled investors to flock to safe value companies that are old, have cash-rich balance sheets and durable revenue streams.
As such, VanEck Vectors Semiconductor ETF (SMH - Free Report) , iShares Semiconductor ETF (SOXX - Free Report) , First Trust NASDAQ Semiconductor ETF (FTXL - Free Report) and Invesco PHLX Semiconductor ETF (SOXQ - Free Report) have gained 22.4%, 20.1%, 14.3% and 19.7%, respectively, so far this year. The strong trend is likely to continue in the weeks ahead as the Q1 earnings season picks up pace (read: What's Up for Chip ETFs After Their Best Quarter Since 2020?).
Semiconductors have been the most important drivers of the overall growth in technology, given the use of chips in day-to-day life, from cars, to electronic gadgets, to planes and weapons. The demand will continue to trend higher given the increased digitization in various corners like healthcare, transport, financial systems, defense, agriculture and retail, among others.
The rapid adoption of cutting-edge technology like cloud, Internet of Things, autonomous cars, gaming, wearables, VR headsets, drones, virtual reality devices, AI, cryptocurrencies, 5G and other advanced information technologies should continue to fuel growth. Further, the introduction of expensive and new-generation chips has been leading to an enhancement in the product mix for semiconductors.
Some other well-known players in the space, such as Intel (INTC - Free Report) , Qualcomm (QCOM - Free Report) , NVIDIA (NVDA - Free Report) and Advanced Micro Devices (AMD - Free Report) , 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. SOXQ is largely concentrated on four firms with a combined share of 30.2%, followed by 29.2% for SMH, 26.4% for SOXX and 21.6% 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
Intel is slated to release earnings after market close on Apr 27. It has a Zacks Rank #4 and an Earnings ESP of -3.01%. The stock saw negative earnings estimate revision of a penny over the past 30 days for the to-be-reported quarter. Intel delivered a negative earnings surprise of 6.42%, on average, for the preceding four quarters.
Qualcomm has a Zacks Rank #3 and an Earnings ESP of -1.10%. The stock witnessed no earnings estimate revision over the past 30 days for the to-be-reported quarter and delivered an earnings surprise of 3.75% in the trailing four quarters, on average. The company is expected to report earnings after the closing bell on May 3 (see: all the Technology ETFs here).
NVIDIA, expected to report on May 24, has a Zacks Rank #2 and an Earnings ESP of 0.00%. The company delivered a negative earnings surprise of 3.20%, on average, over the past four quarters. It saw no earnings estimate revision over the past 30 days for the quarter to be reported (read: 5 Tech Stocks That Powered Nasdaq ETF in the First Quarter).
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 2.81% 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 2 after the closing bell.
Conclusion
Though the companies do not expect to surprise on earnings this season, semiconductor ETFs might see smooth trading in the weeks ahead as SOXX, SMH and FTXL have a Zacks ETF Rank #2 or 3. This suggests their strong performance in the weeks ahead.