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Chip ETFs to Surge on Intel's Robust Q2 Results

Sweta Killa

Intel INTC, the world’s largest chipmaker, reported stronger-than-expected Q2 results after market close yesterday and offered an upbeat guidance. Earnings of $1.06 per share came in 17 cents above the Zacks Consensus Estimate and improved 2% from the year-ago earnings. Revenues declined 3% year over year to $16.5 billion but were better than the estimated $15.6 billion.

The better-than-expected results were driven by strong demand for higher-performance products in both PC-centric and data-centric businesses.

Intel expects revenues of $18 billion and earnings per share of $1.24 for the third quarter, well above the current Zacks Consensus Estimate of $17.69 billion and $1.14, respectively. For 2019, the company raised its revenue guidance from $69 billion to $69.5 billion and expects earnings per share to be $4.40. The Zacks Consensus Estimate is currently pegged at $68.21 billion for revenues and $4.21 for earnings per share.

Intel also announced that it is selling the majority of its smartphone-modem business to Apple AAPL for about $1 billion. The deal is expected to close in the fourth quarter of 2019 (read: Apple May Buy Intel's 5G Modem Business, ETFs to Rally).

Following the robust results, shares of Intel climbed more than 7% in after-market hours on elevated volume. Intel has a Zacks Rank #4 (Sell) and a VGM Score of B. It belongs to a bottom-ranked industry (bottom 34%).

ETFs to Tap

Investors could definitely tap the surge in INTC stock with the help of ETFs that have a large allocation to the biggest semiconductor company (see: all the Technology ETFs here).

VanEck Vectors Semiconductor ETF SMH

This fund provides exposure to 25 securities by tracking the MVIS US Listed Semiconductor 25 Index. Intel occupies the second position with 11.6% of the assets. The product has managed assets worth $1.3 billion and charges 35 bps in annual fees and expenses. It is heavily traded with volume of around 6.8 million shares per day and has a Zacks ETF Rank #2 (Buy) with a High risk outlook (read: Can Q2 Earnings Power Semiconductor ETFs?).

iShares PHLX Semiconductor ETF SOXX

This ETF follows the PHLX SOX Semiconductor Sector Index and offers exposure to 30 U.S. firms with INTC taking the fourth spot with 7.7% allocation. The fund has amassed $1.8 billion in its asset base and trades in volume of about 769,000 shares a day. The product charges a fee of 47 bps a year from investors and has a Zacks ETF Rank #2 with a High risk outlook.

First Trust Nasdaq Semiconductor ETF FTXL

This fund offers exposure to the most-liquid U.S. semiconductor securities based on volatility, value and growth by tracking the Nasdaq US Smart Semiconductor Index. Holding 30 stocks in its basket, Intel is the fourth firm accounting for 7.7% share. FTXL has accumulated $30.5 million in AUM and trades in average daily volume of 15,000 shares. It charges 0.60% in expense ratio and has a Zacks ETF Rank #3.

Invesco Dynamic Semiconductors ETF PSI

This fund tracks the Dynamic Semiconductor Intellidex Index, holding 29 securities in the basket. Intel occupies the sixth position and makes up for 4.9% share in the basket. PSI has lower AUM of $195.9 million and sees moderate average daily volume of about 40,000 shares. It charges 61 bps in annual fees and carries a Zacks ETF Rank #2 with a High risk outlook (read: Semiconductor ETFs: What Investors Need to Know).

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Apple Inc. (AAPL) : Free Stock Analysis Report
 
Invesco Dynamic Semiconductors ETF (PSI): ETF Research Reports
 
iShares PHLX Semiconductor ETF (SOXX): ETF Research Reports
 
VanEck Vectors Semiconductor ETF (SMH): ETF Research Reports
 
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