May 27, 2024


Unlimited Technology

Intel Beats, Guides Lower: ETFs in Focus

Intel INTC reported better-than-expected Q2 results after market close yesterday. The world’s largest chipmaker smashed estimates for both earnings and revenues but forecast weak earnings for the third quarter. It warned that its next-generation chips will be delayed further.

Q2 Earnings in Focus

Earnings of $1.23 per share came in 12 cents above the Zacks Consensus Estimate and improved 16% from year-ago earnings. Revenues climbed 20% year over year to $19.7 billion and were better than the estimated $18.5 billion. Robust results were driven by strong sales of cloud, notebook, memory and 5G products in an environment where digital services and computing performance are essential to live, work and stay connected.
The company achieved record second-quarter revenues with 34% year over year data-centric revenue growth and 7% PC-centric revenue growth (read: Semiconductor ETFs Continue to Shine as Q2 Earnings Unfold).

Intel expects revenues of $18.20 billion and earnings per share of $1.10 for the third quarter of 2020. Though revenue guidance is above the current Zacks Consensus Estimate of $18.04 billion, the earnings forecast falls short of the consensus estimate of $1.16. For the full year, Intel now expects to earn an adjusted $4.85 a share on sales of $75 billion. The Zacks Consensus Estimate is pegged at earnings of $4.80 a share and revenues of $74.01 billion.

Despite the earnings beat, shares of Intel dropped as much as 10% on weak guidance in after-market hours on elevated volume. The stock has a Zacks Rank #2 (Buy) and VGM Score of B. It belongs to a favorable Zacks industry (placed at the top 23% of 250+ industries).

ETFs to Tap

Given this, ETFs with the highest allocation to the biggest semiconductor company will be in focus. Investors should closely monitor the movement of these funds and grab the opportunity whenever it arises (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 9.3% of the assets. The product has managed assets worth $2.6 billion and charges 35 bps in annual fees and expenses. It is heavily traded with volume of more than 5 million shares per day and has a Zacks ETF Rank #2 (Buy) with a High risk outlook (read: Chip ETF Posts Best Q2: 5 Stocks That Led the Way).

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 fifth spot with 6.8% allocation. The fund has amassed $3.3 billion in its asset base and trades in volume of about 1.1 million shares a day. The product charges a fee of 46 bps a year from investors and has a Zacks ETF Rank #1 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 31 stocks in its basket, Intel is the fourth firm accounting for 7.2% share. FTXL has accumulated $44 million in AUM and trades in average daily volume of 16,000 shares. It charges 0.60% in expense ratio and has a Zacks ETF Rank #2.

Invesco Dynamic Semiconductors ETF PSI

This fund tracks the Dynamic Semiconductor Intellidex Index, holding 32 securities in the basket. Intel occupies the eight position and makes up for 4.3% share in the basket. PSI has AUM of $284.6 million and sees moderate average daily volume of about 40,000 shares. It charges 58 bps in annual fees and carries a Zacks ETF Rank #1 with a High risk outlook.

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Intel Corporation (INTC) : Free Stock Analysis Report
iShares PHLX Semiconductor ETF (SOXX): ETF Research Reports
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VanEck Vectors Semiconductor ETF (SMH): ETF Research Reports
First Trust NASDAQ Semiconductor ETF (FTXL): ETF Research Reports
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