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Tech stocks have surged immensely in the past year, with the tech-heavy Invesco QQQ Trust Series (QQQ - Free Report) adding 29.7%. Technology Select Sector SPDR Fund (XLK - Free Report) is up 31% in the same period (as of Jul 16, 2024). However, things could change for the worse, in the coming days.
The odds of former President Donald Trump returning to the White House have risen significantly following the weekend’s attempted assassination. Due to this, many U.S. stocks are facing a considerable pullback from record highs, due to concerns in the tech sector.
Presidential candidate Trump favors higher tariffs, particularly on imports from China. Plus, statements from Trump regarding Taiwan's defense support are weighing heavily on tech stocks.
The former president said Taiwan should pay the U.S. for defense, in an interview with Bloomberg Businessweek published on Tuesday. He also claimed that Taiwan took “about 100%” of America’s semiconductor business, as quoted on CNBC.
This has hurt semiconductor stocks such as NVIDIA (NVDA - Free Report) and Super Micro Computer (SMCI - Free Report) , driving the VanEck Semiconductor ETF (SMH - Free Report) down almost 7%. Recent reports indicate that the Biden administration is also considering stricter measures on companies supplying advanced chip technology to China.
This news has adversely affected stocks like ASML, which saw a 12.7% drop. TSMC, based in Taiwan, also witnessed a considerable decline of over 7%, reflecting market concerns over geopolitical tensions.
Any Ray of Hope?
Although the tech sector faces challenges due to geopolitical uncertainties, positive corporate earnings and robust economic data are tailwinds. Cryptocurrencies and related stocks have risen sharply in hopes of a more friendly administration if Trump wins.
Trump is scheduled to speak at a crypto conference later this month. The iShares Bitcoin Trust (IBIT - Free Report) is up over 10% this week. And if the cryptocurrency rises, the demand for mining hardware can increase, leading to stability in the broader semiconductor space.
The Artificial Intelligence (AI) boom is another reason to boost chip ETFs. Big chipmakers have been racing to introduce new-generation AI chips. There have been announcements from Intel, Advanced Micro Devices and NVIDIA.
The global PC market, which has been suffering so far, is also recording a notable turnaround, with IDC reporting a 3% expansion in the recent quarter, marking the second successive quarter of growth after seven quarters of decline, per a Yahoo Finance article.
Gartner also points to a recovery, albeit slightly slower at 1.9%. Notably, the PC segment suffered due to pandemic-related early sales and the resultant decline in demand.
Bottom Line
Investors with a strong stomach for risks can thus bet on chip ETFs like Strive U.S. Semiconductor ETF (SHOC - Free Report) , AXS Esoterica NextG Economy ETF (WUGI - Free Report) , Invesco PHLX Semiconductor ETF (SOXQ - Free Report) , TrueShares Technology, AI & Deep Learning ETF (LRNZ - Free Report) , iShares Semiconductor ETF (SOXX - Free Report) and First Trust NASDAQ Semiconductor ETF (FTXL - Free Report) .
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Tough Time Ahead of Nasdaq & Semiconductor ETFs?
Tech stocks have surged immensely in the past year, with the tech-heavy Invesco QQQ Trust Series (QQQ - Free Report) adding 29.7%. Technology Select Sector SPDR Fund (XLK - Free Report) is up 31% in the same period (as of Jul 16, 2024). However, things could change for the worse, in the coming days.
The odds of former President Donald Trump returning to the White House have risen significantly following the weekend’s attempted assassination. Due to this, many U.S. stocks are facing a considerable pullback from record highs, due to concerns in the tech sector.
Presidential candidate Trump favors higher tariffs, particularly on imports from China. Plus, statements from Trump regarding Taiwan's defense support are weighing heavily on tech stocks.
The former president said Taiwan should pay the U.S. for defense, in an interview with Bloomberg Businessweek published on Tuesday. He also claimed that Taiwan took “about 100%” of America’s semiconductor business, as quoted on CNBC.
This has hurt semiconductor stocks such as NVIDIA (NVDA - Free Report) and Super Micro Computer (SMCI - Free Report) , driving the VanEck Semiconductor ETF (SMH - Free Report) down almost 7%. Recent reports indicate that the Biden administration is also considering stricter measures on companies supplying advanced chip technology to China.
This news has adversely affected stocks like ASML, which saw a 12.7% drop. TSMC, based in Taiwan, also witnessed a considerable decline of over 7%, reflecting market concerns over geopolitical tensions.
Any Ray of Hope?
Although the tech sector faces challenges due to geopolitical uncertainties, positive corporate earnings and robust economic data are tailwinds. Cryptocurrencies and related stocks have risen sharply in hopes of a more friendly administration if Trump wins.
Trump is scheduled to speak at a crypto conference later this month. The iShares Bitcoin Trust (IBIT - Free Report) is up over 10% this week. And if the cryptocurrency rises, the demand for mining hardware can increase, leading to stability in the broader semiconductor space.
The Artificial Intelligence (AI) boom is another reason to boost chip ETFs. Big chipmakers have been racing to introduce new-generation AI chips. There have been announcements from Intel, Advanced Micro Devices and NVIDIA.
The global PC market, which has been suffering so far, is also recording a notable turnaround, with IDC reporting a 3% expansion in the recent quarter, marking the second successive quarter of growth after seven quarters of decline, per a Yahoo Finance article.
Gartner also points to a recovery, albeit slightly slower at 1.9%. Notably, the PC segment suffered due to pandemic-related early sales and the resultant decline in demand.
Bottom Line
Investors with a strong stomach for risks can thus bet on chip ETFs like Strive U.S. Semiconductor ETF (SHOC - Free Report) , AXS Esoterica NextG Economy ETF (WUGI - Free Report) , Invesco PHLX Semiconductor ETF (SOXQ - Free Report) , TrueShares Technology, AI & Deep Learning ETF (LRNZ - Free Report) , iShares Semiconductor ETF (SOXX - Free Report) and First Trust NASDAQ Semiconductor ETF (FTXL - Free Report) .