Intel INTC reported Q2 results after market close yesterday. The world’s largest chipmaker smashed estimates for both earnings and revenues and lifted its annual revenue guidance.
Q2 Earnings in Focus
Earnings of $1.28 per share came above the Zacks Consensus Estimate of $1.06 and improved from the year-ago earnings of $1.23. Revenues were up 2% year over year at $18.53 billion and better than the estimated $17.73 billion. With this, Intel's sales have fallen year over year for four straight quarter but its earnings returned to growth after three consecutive flat or down quarters.
Robust results were driven by strong demand for PC chips. Though data-centric revenue growth dropped 9%, PC-centric revenue growth rose 6% year over year. Internet of Things Group (IOTG) and Mobileye generated record revenues, increasing 47% and 124%, respectively (see: all the Technology ETFs here).
Intel has been grappling with a chip shortage, which is expected to bottom out in the second half of the year. Its data-center business will likely return to strong growth in the second half while the PC market will continue to expand into 2022.
Intel’s new CEO Pat Gelsinger, who took over in February, has pledged to regain Intel’s technological leadership in the semiconductor industry, and plans to spend heavily on expanding its reach in manufacturing to pose a stronger challenge to Taiwan Semiconductor Manufacturing (TSM) and Samsung Electronics Co. He has a plan to make Intel a contract chip manufacturer, or a foundry that would make other company’s chips, in addition to its own. But this will take years to come to fruition.
Intel expects revenues of about $19.1 billion and earnings per share of $1.10 for the third quarter of 2021. Both the revenue and earnings per share guidance are well below the current Zacks Consensus Estimate of $18.31 billion and $1.08, respectively. For the full year, the company raised its revenue outlook from $72.5 billion to $73.5 billion while reiterated its earnings per share guidance of $4.80. The Zacks Consensus Estimate is pegged at $72.89 billion for revenues and $4.62 for earnings per share.
Shares of Intel dropped as much as 3% in after market hours on elevated volumes. The stock has a Zacks Rank #2 (Buy) and VGM Score of B. It belongs to a top-ranked Zacks industry (placed at the top 18% of 250+ industries).
ETFs to Tap
Given this, ETFs with the highest allocation to the world’s biggest semiconductor maker will be in focus. Investors should closely monitor the movement of these funds and grab the opportunity whenever it arises.
Qraft AI-Enhanced U.S. Next Value ETF NVQ
This fund is actively managed, providing investors with long-term capital appreciation by utilizing a value investing strategy enhanced by the use of artificial intelligence. It holds 100 stocks in its basket with Intel taking the top spot at 8.2%. Consumer discretionary takes the largest share at 28.4% followed by communication services and financials that also receives double-digit exposure each. The ETF has amassed $6.2 million in its asset base since its inception last December and trades in an average daily volume of 2,000 shares. It charges 75 basis points (bps) in annual fees.
iShares Semiconductor ETF SOXX
This 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 INTC taking the third spot at 7.6% allocation. The fund has amassed $6.8 billion in its asset base and trades in volume of about 885,000 shares a day. The product charges a fee of 46 bps a year from investors and has a Zacks ETF Rank #2 with a High risk outlook (read: 5 Top-Performing Semiconductor ETFs YTD).
Invesco PHLX Semiconductor ETF SOXQ
This fund tracks the PHLX Semiconductor Sector Index, holding 30 stocks in its basket. Intel occupies the fifth position with 7.6% share in the basket. SOXQ debuted in the space last month and has accumulated $62.4 million in its asset base. It came up with zero fees and trades in an average daily volume of 44,000 shares.
First Trust NASDAQ Technology Dividend Index Fund TDIV
This fund provides exposure to dividend payers within the technology sector by tracking the Nasdaq Technology Dividend Index. The product has amassed $1.6 billion in its asset base while trading in volume of around 52,000 shares per day. It charges 50 bps in annual fees and holds about 76 securities in its basket. Of these firms, Intel takes the fourth spot, making up for 7.7% of the assets. From a sector look, about one-third of the portfolio is dominated by semiconductors & semiconductor equipment followed by software, technology hardware, storage & peripherals and diversified telecommunication services.
iShares Edge MSCI USA Value Factor ETF VLUE
This fund offers exposure to large- and mid-cap U.S. stocks with lower valuations based on fundamentals and tracks the MSCI USA Enhanced Value Index. It holds 149 stocks in its basket with INTC occupying the second position at 6.4% of assets. The ETF has amassed $15.5 billion in its asset base, and charges 15 bps in annual fees. It trades in an average daily volume of 1.2 million shares and has a Zacks Rank #1 (Strong Buy) with a Medium risk outlook (read: Value Investing Wins in 1H: 7 Best-Performing ETFs).
VanEck Vectors Semiconductor ETF SMH
This fund provides exposure to 25 securities by tracking the MVIS US Listed Semiconductor 25 Index. Intel occupies the sixth position with 4.9% of the assets. The product has managed assets worth $5.6 billion and charges 35 bps in annual fees and expenses. It is heavily traded with volume of 3.7 million shares per day and has a Zacks ETF Rank #3 (Hold) with a High risk outlook.
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Intel Corporation (INTC) : Free Stock Analysis Report
VanEck Vectors Semiconductor ETF (SMH): ETF Research Reports
iShares Semiconductor ETF (SOXX): ETF Research Reports
First Trust NASDAQ Technology Dividend ETF (TDIV): ETF Research Reports
iShares MSCI USA Value Factor ETF (VLUE): ETF Research Reports
QRAFT AIEnhanced U.S. Next Value ETF (NVQ): ETF Research Reports
Invesco PHLX Semiconductor ETF (SOXQ): ETF Research Reports
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