Semiconductor ETFs Try to Shake Off Intel's Earnings Hit | ETF Trends

Intel Corp. (NasdaqGS: INTC) dragged on semiconductor sector-related exchange traded funds after the chipmaker surprised markets with a much worse-than-expected quarterly loss and downwardly revised its full-year outlook.

On Friday, the iShares PHLX Semiconductor ETF (NasdaqGS: SOXX) increased 0.7% and the Invesco PHLX Semiconductor ETF (SOXQ) was up 1.0%.

Meanwhile, Intel shares declined 8.6%. INTC makes up 8.5% of SOXQ’s underlying portfolio and 6.4% of SOXX.

Intel Corp. revealed second-quarter revenue of $15.3 billion, or down 22% year-over-year, missing Wall Street expectations and marking its worst revenue decline in over a decade. The chipmaker attributed the slowdown to deteriorating economic activity and outlook.

Given the current market environment, the company also warned of a further drop in overall personal computer purchases and product delays this year.

“This quarter’s results were below the standards we have set for the company and our shareholders. We must and will do better. The sudden and rapid decline in economic activity was the largest driver, but the shortfall also reflects our own execution issues,” Pat Gelsinger, Intel CEO, said in a note. “We are being responsive to changing business conditions, working closely with our customers while remaining laser-focused on our strategy and long-term opportunities. We are embracing this challenging environment to accelerate our transformation.”

Discretionary spending for items like personal computers and peripherals has all declined as higher interest rates and elevated inflationary pressures weigh on consumer spending. Meanwhile, the shift toward normal economic activity in the post-COVID-19 environment has also brought many workers back to the normal workplace, diminishing demand for at-home PCs or remote work.

Consequently, Intel will be taking a more conservative approach moving forward to manage the rising costs and more muted growth outlook.

“We are taking necessary actions to manage through the current environment, including accelerating the deployment of our smart capital strategy, while reiterating our prior full-year adjusted free cash flow guidance and returning gross margins to our target range by the fourth quarter,” David Zinsner, Intel CFO, said in a note. “We remain fully committed to our business strategy, the long-term financial model communicated at our investor meeting, and a strong and growing dividend.”

For more news, information, and strategy, visit VettaFi.