What's in Store for Semiconductor ETFs in Q4 Earnings?
After a strong 2023, the semiconductor sector lost its momentum at the start of 2024 on easing bets for Fed rate cuts in March. This is because the bouts of economic data came in hotter than expected, dialing back expectations of early rate cuts, thereby leading to losses in the sector. However, the expansion of artificial intelligence (AI) applications holds the promise of ushering in fresh opportunities for growth within the sector.
VanEck Vectors Semiconductor ETF SMH is modestly up 0.5%, while iShares Semiconductor ETF SOXX, First Trust NASDAQ Semiconductor ETF FTXL and Invesco PHLX Semiconductor ETF SOXQ plunged 2%, 3.2% and 1.7%, respectively, in the initial weeks of this year. The weak trend might reverse in the weeks ahead as the Q4 earnings season unfolds (read: Can Semiconductor ETFs Continue to Shine in 2024?).
Some 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, will 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. SMH is largely concentrated on these firms with a combined share of 46.1%, followed by 41.4% for SOXQ, 39.5% for FTXL and 38.5% for SOXX.
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 Jan 23, after market close. It has an Earnings ESP of +0.12% 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 4.87%, on average.
Lam Research has an Earnings ESP of 0.00% and a Zacks Rank #3. 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 11.61%, on average.
Intel has an Earnings ESP of -0.32% and a Zacks Rank #4. The stock saw no earnings estimate revision over the past 30 days for the to-be-reported quarter. Intel delivered an earnings surprise of 136.3%, on average, for the preceding four quarters. It is slated to release earnings after market close on Jan 25.
Qualcomm has an Earnings ESP of +3.45% and a Zacks Rank #3. The company witnessed a positive earnings estimate revision of a penny over the past 30 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 2.23% in the trailing four quarters, on average. The company is slated to report earnings after the closing bell on Jan 31 (see: all the Technology ETFs here).
Advanced Micro Devices has an Earnings ESP of -0.98% and a Zacks Rank #2. Its earnings surprise history is impressive, with the average beat being 4.10% 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 Jan 30 after the closing bell.
Nvidia currently has an Earnings ESP of +3.68% and a Zacks Rank #2. This videogame-gear specialist saw positive earnings estimate revision by a penny over the past 30 days for the fourth quarter of fiscal 2024. Nvidia delivered an earnings surprise of 18.99%, on average, in the last four quarters. Nvidia is slated to report on Feb 28 (read: Nvidia Off to a Great Start in 2024: Is More Rally in Store for ETFs?).
Conclusion
Though a few companies are expected to deliver a surprise this earnings season, semiconductor ETFs might see smooth trading in the weeks ahead as SOXX, SMH, FTXL and SOXQ have a Zacks ETF Rank #1 each. This suggests their outperformance 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
Lam Research Corporation (LRCX) : 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
