CES will propel gains for tech investors, historical data shows

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Here's the surprising relationship between CES and semiconductor stocks
Key Points
  • The Consumer Electronics Show, which kicked off Tuesday, could produce more gains for the tech sector, according to hedge fund trading tool Kensho.
  • The ETF that tracks semiconductors, the SMH, soared more than 60% in 2019.
  • Historical data shows the VanEck Vectors Semiconductors ETF logs an average gain of nearly 1% during the four-day span of CES.

The Consumer Electronics Show could produce more gains for the tech sector.

The tech sector was the biggest winner of 2019, with a gain of 48%, leading all 11 S&P 500 sectors, and historical data show that more gains will come during the show's four-day span, according to hedge fund trading tool Kensho.

Attendees wait in line to enter the Google play space at CES 2020 in Las Vegas, Nevada, Jan. 7, 2020.
David Paul Morris | Bloomberg | Getty Images

Of this sector, semiconductors, in particular, outperformed, benefiting from increased digitization and cloud use, both of which accelerate chip demand, and the introduction of the Internet of Things, artificial-intelligence and blockchain technology.

According to a recent report by McKinsey & Co., AI could allow semiconductor companies to capture 40% to 50% of total value from the technology stack, representing the best opportunity they've had in decades.

The ETF that tracks semiconductors, the SMH, soared more than 60% in 2019. Kensho tracked the performance of semiconductor ETFs over the last eight years during CES and concluded that more gains could be in store for the SMH this week: Since 2012, the VanEck Vectors Semiconductors ETF logs an average gain of nearly 1% during the four-day span of the event. It trades positively 75% of the time.

This outperforms both the S&P 500 and the S&P tech sector, which tend to trade relatively flat in that period. Each are positive about 63% of the time.

The S&P hit a fresh all-time high in today's session, crossing its previous all-time intraday high of 3,258.14.

The annual Consumer Electronics Show is the global stage where next-generation innovations are introduced to the marketplace. This year's Las Vegas event will feature more than 4,500 exhibitors in the electronics industry.

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