Intel Pops On Return To Profitability In Q2: ETFs To Tap

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Intel (INTC - Free Report) spread optimism following an earnings surprise in its second-quarter 2023 results after two consecutive quarters of record losses. The world’s largest chipmaker beat both the top and bottom lines and provided an upbeat third-quarter revenue guidance.

Driven by a solid turnaround, INTC shares climbed 8.1% in after-market hours. Investors seeking to tap the growth should consider ETFs with the highest allocation to the world’s biggest semiconductor. These include First Trust Nasdaq Semiconductor ETF (FTXL - Free Report), First Trust NASDAQ Technology Dividend Index Fund (TDIV - Free Report), Invesco PHLX Semiconductor ETF (SOXQ - Free Report), iShares Semiconductor ETF (SOXX - Free Report) and VanEck Vectors Semiconductor ETF (SMH - Free Report).

Q2 Earnings in Focus

Intel reported earnings per share of 13 cents against the Zacks Consensus Estimate of a loss of 4 cents but down from 29 cents in the year-ago quarter. Revenues declined 15% year over year to $12.9 billion but came in above the estimated $12 billion. The better-than-expected results were driven by a recovery in the personal computers (PC) market.

Intel’s sales of PC chips fell 12% in the second quarter to $6.8 billion, marking a big improvement from the 38% collapse in the first quarter. Client computing, data-center and AI, and network and edge revenues declined 12%, 15% and 38%, respectively. Mobileye revenues also edged down 1%.

For the current quarter, Intel projects revenues in the range of $12.9 billion to $13.9 billion, while earnings per share will likely be about 20 cents. The mid-point of both the guidance is much higher than the current Zacks Consensus Estimate of $13.32 billion for revenues and 16 cents for earnings per share. The slump in the PC market has started to ease. This should help Intel make a solid comeback in the second half of the year.

The solid outlook suggests that the chipmaker has turned a corner after sluggish demand for personal computer chips battered its business. Chief executive officer Pat Gelsinger said that the inventory of PC components is now back to normal levels, prompting customers to resume orders.

ETFs to Tap

First Trust Nasdaq Semiconductor ETF (FTXL)

First Trust Nasdaq Semiconductor ETF offers exposure to the most-liquid U.S. semiconductor securities based on volatility, value and growth by tracking the Nasdaq US Smart Semiconductor Index. FTXL holds 31 stocks in its basket, with Intel taking the second spot at 8.9% share.

First Trust Nasdaq Semiconductor ETF has $1.2 billion in AUM. The average trading volume is light at around 79,000 shares and the expense ratio is 0.60%. FTXL has a Zacks ETF Rank #1.

First Trust NASDAQ Technology Dividend Index Fund (TDIV)

First Trust NASDAQ Technology Dividend Index Fund provides exposure to dividend payers within the technology sector by tracking the Nasdaq Technology Dividend Index. It holds about 92 securities in its basket. Of these firms, Intel takes the fourth spot, making up for 8% of the assets. From a sector look, about 37% of the portfolio is dominated by semiconductors & semiconductor equipment, followed by software, and technology hardware, storage & peripherals.

First Trust NASDAQ Technology Dividend Index Fund has amassed $2 billion in its asset base while trading in a volume of around 110,000 shares per day. It charges 50 bps in annual fees.

Invesco PHLX Semiconductor ETF (SOXQ)

Invesco PHLX Semiconductor ETF offers exposure to companies engaged in the semiconductor business. It tracks the PHLX Semiconductor Sector Index, holding 30 stocks in its basket. Of these firms, Intel occupies the fourth position with a 7.5% share.  

Invesco PHLX Semiconductor ETF has accumulated $138.3 million in its asset base. It charges 19 bps in annual fees and trades in an average daily volume of 96,000 shares.

iShares Semiconductor ETF (SOXX)

iShares Semiconductor ETF follows the ICE Semiconductor Index and offers exposure to U.S. companies that design, manufacture and distribute semiconductors. It holds 30 securities in its basket, with Intel occupying the fourth position at 6.2% of assets (read: Best & Worst ETF Areas of First Half 2023).

iShares Semiconductor ETF has amassed $8.6 billion in its asset base and trades in a volume of about 1.2 million shares a day. The product charges a fee of 35 bps a year from investors and has a Zacks ETF Rank #1 with a High risk outlook.

VanEck Vectors Semiconductor ETF (SMH)

VanEck Vectors Semiconductor ETF offers exposure to the companies involved in semiconductor production and equipment. SMH follows the MVIS US Listed Semiconductor 25 Index, which tracks the most liquid companies in the industry based on market capitalization and trading volume. VanEck Vectors Semiconductor ETF holds 26 stocks in its basket, with Intel occupying the sixth position at 4.5%.  

VanEck Vectors Semiconductor ETF has managed assets worth $10 billion and charges 35 bps in annual fees and expenses. SMH is heavily traded with a volume of 7 million shares per day and has a Zacks ETF Rank #2 with a High risk outlook.

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Disclosure: contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any ...

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