Semiconductor ETFs Gain on AMD's Strong Earnings, Optimistic 2022 Outlook

Semiconductor sector-related exchange traded funds climbed on Wednesday after Advanced Micro Devices Inc’s (NasdaqGS: AMD) fourth quarter earnings beat expectations and announced a strong outlook for 2022.

On Wednesday, the iShares PHLX Semiconductor ETF (NasdaqGS: SOXX) advanced 2.6% and the Invesco PHLX Semiconductor ETF (SOXQ) rose 2.2%.

Meanwhile, Advanced Micro Devices shares jumped 5.6% on Wednesday. AMD makes up 6.2% of SOXQ’s underlying portfolio and 4.4% of SOXX.

AMD outperformed Wall Street estimates for earnings and sales, and executives projected $21.5 billion in sales over 2022, higher than analyst expectations of $19.26 billion, CNBC reports. If the projections hold true, it would be a 31% increase over 2021′s sales. AMD also anticipated $5 billion in sales for the first quarter, due to server and PC demand.

The semiconductor company has capitalized on the surge in personal computer and electronics sales for the past two years. It has also recently released new chips with significant performance enhancements that are allowing the chipmaker to better compete with Intel, the biggest supplier of PC chips.

“We expect [semi-custom] revenue to grow this year driven by continued strong demand for the latest Microsoft and Sony consoles,” AMD’s Lisa Su said on a call with analysts, adding that the current console upgrade cycle is outpacing “all prior generations.”

Bernstein analyst Stacy Rasgon upgraded his price target on AMD and called the earnings report a “sl(amd)unk,” adding that the chip maker “crushed it” on its outlook, MarketWatch reports.

“With a beat this big, you have to dig to find nitpicks; if we did so, we might point to upside vs our prior model that is mostly console and PC driven, and/or GMs that (strong as they are) might even leave us wishing for more given the likely positive mix shift the company should be seeing,” Rasgon said.

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