Semiconductor ETFs Continue To Shine As Q2 Earnings Unfold

The semiconductor corner of the broad tech space has bounced back sharply from the first-quarter lows with stocks logging in the best quarterly performance since the tech bubble in the early 2000s. This is because chip stocks have shown strong resilience amid the coronavirus pandemic on stay-at-home orders, which bolstered demand for gaming chips and data center business.

iShares PHLX Semiconductor ETF (SOXX - Free Report)VanEck Vectors Semiconductor ETF (SMH - Free Report), and First Trust NASDAQ Semiconductor ETF (FTXL - Free Reportwere up more than 30% each in a month. This upward trend might continue going into the earnings season. 

Some well-known players in the space like Texas Instruments (TXN - Free Report), Intel (INTC - Free Report), Qualcomm (QCOM - Free Report), NVIDIA (NVDA - Free Report) and Advanced Micro Devices Inc. (AMD - Free Report) will report earnings in the coming days. Let’s delve into the financial picture of the companies that have higher allocation in the above-mentioned ETFs and the power to move the funds up or down as Q2 earnings unfold. SOXX is largely concentrated on five firms with a combined share of 34.8% followed by 31.7% for SMH and 20.9% 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 Jul 21, after market close. It has a Zacks Rank #2 and an Earnings ESP of +6.19%. The stock saw negative earnings estimate revision of a penny over the past 7 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. The earnings surprise track over the last four quarters has been good, with the beat being 11.2%, on average. The stock has a VGM Score of C.

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