The Direxion Daily Semiconductor Bull 3X Shares ETF (SOXL) has been one of the best-performing funds in the past decade as demand for chips soared. The fund has jumped by more than 2,085% in the last decade and by 186% in the past five years. It has also risen by 12% this year.
Popular semiconductor ETF
The SOXL ETF is one of the most popular ETFs among investors focusing on the semiconductor industry.
It is a different one than the other funds like the VanEck Semiconductor ETF (SMH) and the iShares Semiconductor ETF (SOXX) in that it uses leverage to optimize returns.
It focuses on generating three times the daily returns of the NYSE Semiconductor Index, which invests in the biggest semiconductor companies globally. For example, if the index rises by 1%, the fund will rise by 3%.
Over time, it does well when the NYSE Semiconductor Index is rising, and vice versa. On the other hand, the Direxion Daily Semiconductor Bear 3X Shares ETF (SOXS) does well when these stocks are falling. This explains why the fund has dropped by over 81% in the last twelve months and by 99.9% since its inception.
The same is true with the ProShares UltraPro Short QQQ ETF (SQQQ), which has plunged by over 99% in the past few years.
The SOXL ETF has invested in several semiconductor companies like Advanced Micro Devices (AMD), Analog Devices, ASML, LAM Research, NVDIA, Qualcomm, and Qorvo.
The fund has over $11.2 billion in assets and an expense ratio of 0.76%, making it more expensive than most other funds. SOXX and SMH have a ratio of 0.35%.
Semiconductor earnings
The SOXL ETF will be in the spotlight as investors focus on the ongoing earnings season for most semiconductor companies.
Taiwan Semiconductor, the biggest fabrication company in the world, published strong financial results, signaling that there is still demand. Its net sales rose by 39% YoY to over NT $759 billion. Similarly, its gross profit rose to NT $439 billion, while the net income rose to NT $325 billion.
The company also provided a positive forward guidance, with its fourth-quarter revenue expected to soar to between $26.1 billion and $26.9 billion.
TSMC’s financials are important because they provide a feeling for the broader sector since it is the manufacturer of choice for popular companies like AMD and Nvidia.
Read more: TSMC may pose a long-term threat to US: here’s why
However, ASML, another important company in the semiconductor company, reported strong results that missed analyst estimates. Its net sales rose to 7.5 billion euros from 6.2 billion euros in the same period last year. Its net income jumped to over 2.07 billion euros.
Looking ahead, more semiconductor companies will publish their earnings in the coming weeks. As always, the most important one will be NVIDIA, the second-biggest firm globally, which will release its results on November 27.
NVIDIA is a highly popular company because it has become the face of the artificial intelligence and one of the fastest-growing firms. The last quarter financial results showed that its revenues jumped by 115% to over $30 billion.
Read more: Semiconductor Bull (SOXL) ETF analysis: the sky is the limit
AMD and Intel earnings ahead
AMD, which is run by Jensen Huang’s cousin, will release its results on October 29. Analysts expect the company’s results to show that its revenue rose by 15.7% YoY last quarter to over $6.7 billion.
The key data to watch inthat report will be its data center revenue, which is expected to continue growing. AMD’s GPUs have become popular among technology companies because they are relatively cheaper than NVIDIA’s.
Intel will release its results on October 31st. These will be notable results because of the recent focus on the company. Analysts expect the numbers to show that revenue slowed to $13 billion, while its annual figure will be $52.26 billion.
These numbers will come at a time when there is a speculation about Intel’s future. Qualcomm is expected to make a bid for the firm after the general election.
The other notable companies to watch will be firms like Qualcomm, Arm Holdings, Texas Instruments, and Analog Devices.
Read more: SOXL ETF is overvalued but technicals point to a 25% upside
SOXL ETF stock analysis
SOXL chart by TradingView
The SOXL ETF stock price surged to a record high of $72.52 in 2022 and then plunged to a low of $6 in 2022.
It then staged a strong comeback, moving to a high of $69.77 in July this year. The stock also slumped to about $35.2. It has also moved above the 200-week Exponential Moving Average (EMA). It has also moved below the 50% Fibonacci Retracement point.
The SOXL has formed a bearish engulfing candlestick pattern, a popular bearish sign. Therefore, the fund will likely retreat and retest the 200-week moving average at $28.6, which is about 20% below the current level.
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