The Direxion Semiconductor Bull 3x Shares (SOXL), VanEck Semiconductor (SMH), and the iShares Semiconductor (SOXX) ETFs will be in the spotlight as investors focus on the Taiwan earthquake and the big Intel loss.
These three are the biggest semiconductor ETFs in Wall Street. They all track the biggest companies in the industry like Taiwan Semiconductor, Nvidia, Intel, AMD, and Micron. As a result, they were among the best-performing funds in Wall Street because of the ongoing artificial intelligence craze.
The SMH ETF jumped by over 28% in the first quarter, beating the S&P 500 and Nasdaq 100 indices, which rose by less than 10%. Similarly, the SOXL ETF, a leveraged fund, rose by over 46% in Q1, making it one of the best-performing ETFs.
SMH vs SOXX vs SOXL ETFs
These funds will be in the spotlight on Wednesday as investors react to the huge earthquake in Taiwan. This quake, the most powerful in over 25 years, led to the deaths of over 7 people and over 700 injuries.
As a result, Taiwan Semiconductor, the biggest fab company in the world, announced that it had paused some work. In another statement, the company said that its workers had returned to work, meaning that it will have no major implications to the semiconductor industry.
The other important semiconductor news was from Intel. In a statement, the company said that its chip-making unit made $7 billion in losses in 2023. That was a bigger loss than the $5.2 billion it made a year earlier. Also, the revenue retreated by 31% to $18.9 billion.
These ETFs will also react to the upcoming semiconductor earnings this month. Intel will publish its financial results on April 26th. As I wrote here, Super Micro Computer, the high-flying company, will publish its numbers on April 18th. AMD’s results are scheduled for May 1st while Nvidia’s results will come out on May 5th.
The biggest concern among investors is whether the semiconductor industry is going through a bubble. Nvidia’s price-to-earnings (P/E) ratio stood at 69.67, much higher than the sector median of 22.47.
AMD is also a highly overvalued company with a forward P/E multiple of 50 while Broadcom is going for 28.5x forward sales. Therefore, the first quarter results will help investors assess whether this growth continued in Q1.
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