10 ETFs to Capitalize on Qualcomm’s Earnings Strength

Multinational semiconductor and telecommunications giant Qualcomm delivered strong fiscal fourth-quarter earnings to investors, which could put the ETFs with the heaviest weightings of the company on watch as technology like 5G begins to enter the fold.

Per a CNBC report, “Qualcomm reported adjusted earnings per share of 78 cents, topping the average estimate of 71 cents, according to Refinitiv. Revenue of $4.8 billion also beat analyst expectations of $4.7 billion. The company attributed its strong profit primarily to its licensing segment, which makes money from patents and other licensing arrangements. The Qualcomm Technology Licensing business generated $1.15 billion in revenue.”

“In addition, our QTL results for the third and fourth quarter of fiscal 2019 included royalties from Apple and its contract manufacturers for sales made in the June 2019 and September 2019 quarter, respectively,” Qualcomm said in its statement.

Analysts are also loving Qualcomm, especially with the rollout of 5G just ahead.

“Qualcomm reported solid fiscal fourth-quarter results with revenue in line with guidance,” wrote Despite the array of factors impacting results (5G transition, U.S.-China tensions, Huawei licensing dispute, Apple agreement, and regulatory scrutiny), we think the firm remains a prominent player in 5G.”

“We anticipate continued licensing sales from 5G devices and growth in content in 5G devices to bolster chip revenue, or QCT,” he added. “Management expects the first calendar quarter in 2020 to represent an inflection point in 5G revenue, and we project QCT to be up in the double-digits in fiscal 2020. We are raising our fair value estimate to $80 per share from $72, thanks to our improved outlook for Qualcomm in 5G. Nonetheless, shares of narrow-moat Qualcomm look expensive in our view, as shares are up about 50% year-to-date.”

ETF investors looking for an opportunity can look at funds with the heaviest weightings of Qualcomm. At the top of the heap is the iShares PHLX Semiconductor ETF (NasdaqGS: SOXX). SOXX seeks daily investment results that correspond to two times (2x) the daily performance of the Dow Jones U.S. SemiconductorsSM Index.

The fund invests in financial instruments that ProShare Advisors believes, in combination, should produce daily returns consistent with the fund’s investment objective. The index measures the performance of certain companies in the semiconductor sub-sector of the U.S. equity market. Component companies are engaged in the production of semiconductors and other integrated chips, as well as other related products such as semiconductor capital equipment and mother-boards.

Here is the rest of the list:

Ticker  ETF  Weighting 
SOXX iShares PHLX Semiconductor ETF 7.63%
PXQ Invesco Dynamic Networking ETF 5.47%
PSI Invesco Dynamic Semiconductors ETF 4.92%
SMH VanEck Vectors Semiconductor ETF 4.91%
IDRV iShares Self-Driving EV and Tech ETF 4.28%
WBIG WBI Bull|Bear Yield 1000 ETF 4.16%
TDIV First Trust NASDAQ Technology Dividend Index Fund 4.06%
PKW Invesco BuyBack Achievers™ ETF 3.93%
AIQ Global X Future Analytics Tech ETF 3.47%
SCHD Schwab US Dividend Equity ETF 3.39%

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