Semiconductor stocks and sector-related exchange traded funds led gains Wednesday after Texas Instruments (NasdaqGS: TXN) and Teradyne (NasdaqGS: TER) both broke out to new 52-week highs on strong second quarter showings.
The iShares PHLX Semiconductor ETF (NasdaqGM: SOXX), the largest semiconductor-related ETF by assets, advanced 2.7% on Wednesday.
Teradyne shares surged 17.7% on Wednesday and was on pace for its best day since 2005 after the chipmaker announced strong second-quarter earnings. TER makes up 1.3% of SOXX’s underlying portfolio.
The company earned 66 cents per share, beating out the 61 cents per share analysts had expected, CNBC reports. Additionally, Teradyne revenue beat expectations and issued a stronger outlook than anticipated.
The strong results were attributed to continued growth in 5G infrastructure, networking and memory test spending, Teradyne said in a statement.
Meanwhile, Texas Instruments shares increased 6.8% and was trading at an all-time high on Wednesday. TXN makes up 7.6% of SOXX’s underlying portfolio.
The company earned $1.36 per share in the second quarter, exceeding analysts’ expectations of $1.22 per share. Looking ahead, Texas Instruments expects an improved third-quarter earnings of $1.31 to $1.53 a share, compared to analysts forecasts of $1.38 a share.
Semiconductors previously suffered in May when the U.S.-China trade war heated up. The Trump administration blacklisted Chinese telecom giant Huawei, a big customer of U.S. chipmakers, which forced companies to stop selling to it. However, the semis group is gaining momentum as President Donald Trump revealed intentions to lift the ban on Huawei in an attempt renew trade talks with China.
“Semiconductor investors are looking past right now and saying that maybe in the second half of this year, economic concerns will start to abate a little,” Willie Delwiche, an investment strategist at Robert W. Baird, told Reuters.
Huawei made up 3% to 4% of Texas Instruments’ total revenue, David Pahl, the company’s head of Investor Relations said on earnings call.
“It’s a mix of comms equipment and some handset in there and some other products…if you look from a regional standpoint, I’d say there’s nothing unusual going on,” Pahl added.
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