Intel INTC reported Q1 results after market close yesterday. The world’s largest chipmaker smashed estimates for both earnings and revenues but disappointed investors with downbeat Q2 outlook.
Q1 Earnings in Focus
Earnings of $1.39 per share came above the Zacks Consensus Estimate of $1.15 but declined from the year-ago earnings of $1.45. Revenues were flat year over year at $18.60 billion and were better than the estimated $18.01 billion. Robust results were driven by strong demand for PC chips. Though data-centric revenue growth dropped 20%, PC-centric revenue growth rose 8% year over year. Revenues in Internet of Things Group (IOTG) and Mobileye (F:0ME) were also better than expected, increasing 4% and 48%, respectively. Notably, Mobileye set a new revenue record in the quarter (see: all the Technology ETFs here).
Intel expects revenues of $17.80 billion and earnings per share of $1.05 for the second quarter of 2021. Both the revenue and earnings per share guidance are well below the current Zacks Consensus Estimate of $17.91 billion and $1.09, respectively. For the full year, the company expects revenue of $72.5 billion and earnings of $4.60 per share. The Zacks Consensus Estimate is pegged at $73.10 billion for revenues and $4.58 for earnings per share.
Revenues are expected to remain strong this year on booming demand for personal computers and cloud computing services (read: PC Sales See Best Growth in 2 Decades: Tech ETFs to Buy).
Intel’s new CEO Pat Gelsinger, who took over in February, announced a plan to invest $20 billion in new microchip manufacturing plants as demand for microchips has been skyrocketing all over the world. The CEO also announced a plan to make Intel a contract chip manufacturer, or a foundry that would make other company’s chips, in addition to its own chips. But that plan will take years to come to fuition.
Shares of Intel dropped as much as 3.1% in after market hours on elevated volumes. The stock has a Zacks Rank #4 (Sell) and VGM Score of A. It belongs to an unfavorable Zacks industry (placed at the top 28% 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.
iShares PHLX Semiconductor ETF SOXX
This ETF follows the PHLX SOX Semiconductor Sector 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 8.1% allocation. The fund has amassed $6.8 billion in its asset base and trades in volume of about 1.5 million shares a day. The product charges a fee of 46 bps a year from investors and has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook (read: Why Semiconductor ETFs Are Soaring).
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 147 stocks in its basket with INTC occupying the top position at 7.9% of assets. The ETF has amassed $14.2 billion in its asset base, while charges 15 bps in annual fees. It trades in an average daily volume of 1.1 million shares and has a Zacks Rank #2 (Buy) with a Medium risk outlook (read: 4 Reasons Why Value ETFs Continue to Outperform).
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 6.2% of the assets. The product has managed assets worth $5.2 billion and charges 35 bps in annual fees and expenses. It is heavily traded with volume of 4.8 million shares per day and has a Zacks ETF Rank #2 with a High risk outlook.
Capital Link NextGen Protocol ETF KOIN
This product follows the ATFI Global NextGen Fintech Index, which is designed to capture the performance of diversified exposure to companies that use or are involved in the innovations of fintech technology. Holding 43 stocks in its portfolio, INTC is the top firm with 4.6% share. The ETF has accumulated $27.9 million and trades in an average daily volume of 11,000 shares. Expense ratio comes in at 0.95%.
iShares Self-Driving EV and Tech ETF IDRV
This product gives access to companies at the forefront of self-driving and electric vehicle innovation by tracking the NYSE FactSet Global Autonomous Driving and Electric Vehicle Index. Holding 100 stocks in its basket, Intel occupies the third position at 4.4% of assets. IDRV has accumulated $360.5 million in its asset base and charges 47 bps in annual fees. The ETF trades in volume of 123,000 shares per day on average (read: Guide to Electric Vehicle ETFs).
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Intel Corporation (NASDAQ:INTC): Free Stock Analysis Report
ISHARS-PHLX SEM (SOXX): ETF Research Reports
VANECK-SEMICON (SMH): ETF Research Reports
ISHARS-MS US VF (NYSE:VFC) (VLUE): ETF Research Reports
INNV-SHS NG PRT (KOIN): ETF Research Reports
ISHR-SLFDRV EV (IDRV): ETF Research Reports
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