The VanEck Vectors Semiconductor ETF (NYSEArca: SMH) closed lower Thursday amid mixed earnings reports from key constituents Dow component Intel (NasdaqGS: INTC) and Qualcomm (NasdaqGS: QCOM).
Still, SMH, one of the bellwether semiconductor exchange traded funds, is in solid shape. Earlier this week, SMH and rival chip ETFs rallied on news that Japanese technology company SoftBank Group Corp. announced a deal to acquire Britain’s ARM Holdings (NasdaqGS: ARMH) for $32 billion.
SoftBank is seeking to expand into the so-called Internet of Things, or home devices from smart-thermostats to security cameras and domestic appliances that connect online, the Associated Press reports.
Related: Tech ETFs with Exposure to Hardware, Internet Segments
SMH and the iShares PHLX Semiconductor ETF (NasdaqGM: SOXX) have recently been durable performers as semiconductor stocks are rebounding to steady the broader technology sector, but that does not mean the gains are over for this suddenly hot group.
[related_stories]SMH “has outpaced peers investing in sector equities in the past five trading sessions, up nearly 5%. It has turned in a 9% gain in the month ended July 20 and a 17% gain year to date,” according to Investor’s Business Daily. “Despite Thursday’s stumble, funds in this industry group are showing strong momentum. Several leveraged and nonleveraged ETFs in this space, including SOXX, boast relative strength lines bolting to new highs.”
Related: 46 Tech ETFs to Tap Into Big Growth Names
Recent ebullience towards tech ETFs is represents a rapid reversal of fortune. Just a few weeks ago, investors were worried about the impact Brexit could have on technology, the S&P 500’s largest sector allocation. Speculation that Great Britain’s decision to depart the European Union could weigh on technology stocks comes just a few weeks after chip stocks and ETFs started showing signs of leadership.
On Thursday, California-based Qualcomm delivered fiscal third-quarter EPS of $1.16 on $6.03 billion in revenue during its fiscal third quarter. Analysts expected QCOM to earn 97 cents on revenue of $5.58 billion. The shares surged on the news.
Risk-tolerant traders betting on quick near-term gains for semiconductor stocks can consider the Direxion Daily Semiconductors Bull 3x Shares (NYSEArca: SOXL), which takes the leveraged 300% daily exposure of the PHLX Semiconductor Sector Index, or the ProShares Ultra Semiconductors (NYSEArca: USD), which follows the 200% daily performance of the Dow Jones U.S. Semiconductors Index.
VanEck Vectors Semiconductor ETF
