Yahoo Finance Can Q1 Earnings Results Recharge Semiconductor ETFs?
In a noteworthy market shift, the semiconductor sector, led by Nvidia NVDA, has been struggling in recent months, with the broader Philadelphia Stock Exchange Semiconductor Index entering a correction phase, declining more than 10% from its record high in March. The index is down nearly 8.5% in a week. Notably, the sector is heading for the worst performance in a month.
This signals a sharp downturn after 18 months of robust performance in equity markets on growing concerns about the long-term demand outlook for semiconductors. The sector has also been hit by concerns over the delayed prospect of interest rate cuts and China’s weak economy. As such, VanEck Vectors Semiconductor ETF SMH, iShares Semiconductor ETF SOXX, Invesco PHLX Semiconductor ETF SOXQ, Strive U.S. Semiconductor ETF SHOC and First Trust NASDAQ Semiconductor ETF FTXL have lost more than 4% each over the past week.
ASML Holding NV ASML, a major player in the chipmaking equipment sector, was one of the biggest losers after reporting a steep decline in bookings during the first quarter. This has triggered concerns about a likely downturn in the semiconductor industry (read: Pain or Gain Ahead of Semiconductor ETFs?).
Taiwan Semiconductor Manufacturing TSM also failed to impress investors following its first-quarter results. Though the company beat estimates on both revenues and earnings, driven by continued strong demand for advanced chips, it dialed back its outlook for chip market expansion, cautioning that the smartphone and personal-computing markets remain weak.
Now, will the fortunes rebound with more well-known players in the space, such as Texas Instruments TXN, Lam Research LRCX, Intel INTC, Qualcomm QCOM, Advanced Micro Devices AMD and NVIDIA NVDA, expected to report earnings in the coming weeks? Let’s delve into the financial picture of the companies with a higher allocation in the abovementioned ETFs and see their power to move the funds up or down as the earnings season unfolds. SHOC is largely concentrated on these firms with a combined share of 49%, followed by 41.8% for SMH, 40.8% for SOXQ, 35.6% for SOXX and 34.4% 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 23, after market close. It has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell). 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 3.22%, on average.
Lam Research has an Earnings ESP of +0.26% and a Zacks Rank #2. The stock saw no earnings estimate revision over the past 30 days for the to-be-reported quarter. Its earnings surprise track over the last four quarters has been good, with the beat being 11.33%, on average.
Intel has an Earnings ESP of -0.32% and a Zacks Rank #3. The stock saw no earnings estimate revision over the past 30 days for the to-be-reported quarter. Intel delivered an earnings surprise of 154.49%, on average, for the preceding four quarters. It is slated to release earnings after market close on Apr 25.
Qualcomm has an Earnings ESP of +6.15% and a Zacks Rank #2. The company witnessed a positive earnings estimate revision of a penny over the past seven days for the to-be-reported quarter. Analysts raising estimates right before earnings — with the most up-to-date information possible — is a good indicator for the stock. Qualcomm delivered an earnings surprise of 5.90% in the trailing four quarters, on average. The company is slated to report earnings after the closing bell on May 1 (see: all the Technology ETFs here).
Advanced Micro Devices has an Earnings ESP of 0.00% and a Zacks Rank #3. Its earnings surprise history is impressive, with the average beat being 2.96% for the preceding four quarters. The stock witnessed no earnings estimate revision over the past 30 days for the quarter to be reported. AMD is slated to report earnings on Apr 30 after the closing bell.
Nvidia currently has an Earnings ESP of +1.43% and a Zacks Rank #1. This leading U.S. chip designer saw a positive earnings estimate revision of 3 cents over the past 30 days for the first quarter of fiscal 2025. Nvidia delivered an earnings surprise of 20.18%, on average, in the last four quarters. Nvidia is slated to report on May 22 (read: What's Ahead for Nvidia ETFs?).
Conclusion
As a few companies are expected to deliver a surprise this earnings season and none witnessed any negative earnings estimate revision activity over the past week amid the deteriorating industry fundamentals, semiconductor ETFs might see smooth trading in the weeks ahead. The abovementioned semiconductor ETFs have either a Zacks ETF Rank #1 or #2, suggesting that they can outperform in the weeks ahead.
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Intel Corporation (INTC) : Free Stock Analysis Report
QUALCOMM Incorporated (QCOM) : Free Stock Analysis Report
Texas Instruments Incorporated (TXN) : Free Stock Analysis Report
Advanced Micro Devices, Inc. (AMD) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
ASML Holding N.V. (ASML) : Free Stock Analysis Report
Lam Research Corporation (LRCX) : Free Stock Analysis Report
Taiwan Semiconductor Manufacturing Company Ltd. (TSM) : Free Stock Analysis Report
VanEck Semiconductor ETF (SMH): ETF Research Reports
iShares Semiconductor ETF (SOXX): ETF Research Reports
First Trust NASDAQ Semiconductor ETF (FTXL): ETF Research Reports
Invesco PHLX Semiconductor ETF (SOXQ): ETF Research Reports
Strive U.S. Semiconductor ETF (SHOC): ETF Research Reports
