What's In Store For Semiconductor ETFs In Q4 Earnings?

The semiconductor corner of the broad tech space was the outperformer last year buoyed by trade optimism as chip stocks have a lot of exposure to China. They derive a large portion of their revenues from China since it is the world’s biggest chip market and have supply chains in the country.
The signing of the initial trade deal led to continued rally in the space with the start of 2020. iShares PHLX Semiconductor ETF (SOXX - Free Report)VanEck Vectors Semiconductor ETF (SMH - Free Reportand First Trust NASDAQ Semiconductor ETF (FTXL - Free Reportwere up at least 3% each. This upward trend might continue going into the earnings season, given that most stocks are expected to beat on earnings.  

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 Applied Materials (AMAT - Free Report) are about to report earnings. 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 Q4 earnings unfold. SOXX is largely concentrated on the five firms with a combined share of 35.5% followed by 30.9% for SMH and 18.7% 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 Jan 22, after market close. It has a Zacks Rank #3 and an Earnings ESP of 0.00%. The Zacks Consensus Estimate for fourth-quarter earnings has been steady over the past 30 days. The earnings surprise track over the last four quarters has been good, with the beat being 5.67%, on average. The stock has a VGM Score of C.

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