Markets

Texas Instruments leads chip stocks to record highs, a surprising move given trade war fears

Key Points
  • The VanEck Vectors Semiconductor ETF, which tracks 25 largest U.S.-listed chip companies, soared to a new intraday all-time high on Wednesday.
  • Teradyne is on pace for its best day since 2005, after the chipmaker posted strong second-quarter earnings.
  • Texas Instruments scored its all-time high on an earnings beat and a better outlook.
A memory module by Samsung Electronics.
SeongJoon Cho | Bloomberg | Getty Images

Semiconductor stocks surged to record highs Wednesday, boosted by a jump in Texas Instruments and Teradyne shares on blowout earnings.

The VanEck Vectors Semiconductor ETF, which tracks 25 largest U.S.-listed chip companies, soared to a new intraday all-time high on Wednesday.

Teradyne surged more than 20%, posting its best day since 2005, after the chipmaker released strong second-quarter earnings. The company earned 66 cents per share, exceeding the 61 cents per share analysts had expected, according to FactSet. Its revenue beat expectations and Teradyne also issued a stronger outlook than expected.

The strong quarterly performance came from the continued growth in 5G infrastructure, networking and memory test spending, Teradyne said in a statement.

Texas Instruments scored its all-time high on Wednesday with its shares surging more than 7% on better-than-expected results. The company earned $1.36 a share in the second quarter, topping analysts' forecast of $1.22 a share, according to FactSet. Texas Instruments expects third-quarter earnings of $1.31 to $1.53 a share, while analysts had forecast $1.38 a share.

Semiconductors took a big hit in May when the U.S.-China trade war heated up. The Trump administration had blacklisted Chinese telecom giant Huawei, a big customer of U.S. chipmakers, which forced companies to stop selling to it. The group has started turning around as President Donald Trump showed openness to ease the sanctions on Huawei.

The Chinese telecom giant accounted for 3% to 4% of Texas Intruments' overall revenue, David Pahl, the company's head of investor relations, said on earnings call, adding that demand from China was "nothing unusual."

"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 said.