3 Semiconductor Stocks Set To Beat This Earnings Season

Semiconductors, which are the building blocks of most emerging technologies like AI and IoT, have been struggling over the last few quarters due to declining memory prices (both DRAM and NAND) and lower demand from smartphone OEMs. This trend is expected to impact results of the industry players in the soon-to-be-reported quarter as well.

Tariffs on electronics due to U.S.-China trade dispute may negatively impact the demand for chips, in turn, impacting semiconductor industry players' results.

Sluggishness in the PC market has been a headwind. Although consumers are rapidly retiring their PCs, replacement seems to have taken a backseat, inducing a fall in PC shipments.

Server market growth is expected to suffer due to lower demand from enterprise buyers and hyperscale companies. Weakness in the China market is a major headwind as well.

Despite some of the current headwinds, the industry looks poised to remain valuable within the larger technological revolution.

Semiconductor companies are poised to benefit from the rapid proliferation of Internet, artificial intelligence, autonomous vehicles and the growing digitization of our lives.

Picking the Right Stocks

Given the existence of a number of industry players, finding the right stocks that have the potential to beat earnings estimates could be a daunting task. Our proprietary methodology, however, makes it fairly simple for you.

You could narrow down the list of choices by looking at stocks that have the combination of a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter

Earnings ESP is our proprietary methodology for determining stocks with the best chance to deliver a positive surprise itheir next earnings announcement. It provides the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.

Our research shows that for stocks with this combination, the chance of a positive earnings surprise is as high as 70%.

Our Choices

Here we present three semiconductor stocks that have the right combination of elements to post an earnings beat in the soon-to-be reported quarter:

Lam Research (NASDAQ:LRCX) has a Zacks Rank #3 and an Earnings ESP of +0.91%. The company is scheduled to report fourth-quarter fiscal 2019 results on Jul 31.

The consensus estimate for earnings has remained stable at $3.40 over the past 30 days.

Lam Research Corporation Price and EPS Surprise

KLA-Tencor Corporation (NASDAQ:KLAC) has a Zacks Rank #3 and an Earnings ESP of +1.34%. The company is expected to report fourth-quarter fiscal 2019 results on Jul 29.

The consensus mark for earnings has increased by a penny to $1.71 over the past 30 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

KLA-Tencor Corporation Price and EPS Surprise

Cree, Inc. CREE has a Zacks Rank #3 and an Earnings ESP of +66.67%. The company is scheduled to report second-quarter 2019 results on Aug 20.

The consensus mark for earnings has remained stable at 10 cents over the past 30 days.

Cree, Inc. Price and EPS Surprise

Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.

This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.

See their latest picks free >>