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Semiconductor ETFs gets a push from NVIDIA’s strong earnings outlook

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The iShares PHLX Semiconductor ETFs (SOXX) and VanEck Vectors Semiconductor ETF (SMH) increased by 0.5% and 0.7%, respectively, on Thursday. Invesco PHLX semiconductor ETFs (SOXQ) increased by 1%.

This after Nvidia Corp’s stock rallied, investors upgraded the stock after their solid quarterly earnings. The semiconductor sector got a lift from this. 

Meanwhile, Nvidia shares were 3.5% higher. NVDA makes up 9.7% of SMH’s underlying portfolio, 9.4% of SOXQ, and 9.3% of SOXX.

Nvidia has an estimated revenue of $6.66 billion to $6.94 billion, higher than Wall Street’s estimations. An increase in data-centre sales made up $500 million, and new record sales in gaming and data-centre sales. 

However, the demand for GPUs, graphics processing units used in cryptocurrency mining, was analysts’ focus. But it did not cause an impact on the outlook.

But analysts were relieved that there was a lack of interest in crypto mining since there was a decline in crypto values which caused the mining to slow down and miners to reduce their GPU operations.

Meanwhile, Nvidia is experimenting with Cryptocurrency mining processors (CMPs), an alternative to graphics processing units that were more for personal computers. 

Nvidia’s Arm acquisition delayed

In other news, Nvidia is in the process of acquiring Arm, but the UK government has paused the acquisition due to national security concerns. The deal, which is worth $40 billion, is the largest in the semiconductor industry. And is a move for Nvidia to advance in artificial intelligence and the Internet of Things.

Arm is of Japan’s SoftBank Group Corp, a leading global semiconductor manufacturer. Arm is based in Cambridge, UK, and its core business is CPUs. SoftBank acquired Arm in 2016, and it was valued at $32 billion.

Arm’s core business is chips designs for mobile phones; thereby, the acquisition would give Nvidia a significant edge. Other players in the industry who raised concerns over this monopoly is Apple, Microsoft and Chinese firms led by Huawei’s semiconductor subsidiary HiSilicon. 

The UK’s CMA has issued a report to the government wherein it raised concerns around risk to national security. This investigation is believed to be continued, and the Arm acquisition has been delayed.

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Justin N. Richards

Justin N. Richards is a Florida-based technical analyst, market researcher, educator, and trader. Justin began his career in Chicago in 2001 performing futures market analysis for floor traders at the Chicago Board of Trade and the Chicago Mercantile Exchange. He also worked for numerous brokerage firms during that time, all of which hold him in high regard, and he has been providing outstanding analysis services for traders worldwide ever since. Mr. Richards is an expert in the area of market patterns, price and time analysis as it applies to futures, Forex, and stocks. In addition to these talents, he provides educational services for investors looking to improve their analysis and trade skills. Justin has a B.A. in Business Administration from UCLA and an M.S. in Financial Markets and Trading from the Illinois Institute of Technology. Justin’s professional experience, education, and discipline, not only make him an exceptional analyst, they point him out as a reliable, hard working and intelligent business strategist who is dedicated to his craft.
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