Yahoo Finance ETFs Set to Gain on Alphabet's Q1 Earnings Beat
After the closing bell on Tuesday, Google parent Alphabet GOOGL reported solid first-quarter 2023 results, topping both revenue and earnings estimates. The result followed two quarters of earnings disappointment.
As such, shares of GOOGL jumped as much as 5% in after-market trading on an elevated volume. Investors should tap the strength with ETFs with a substantial allocation to Alphabet. These include Communication Services Select Sector SPDR Fund XLC, Vanguard Communication Services ETF VOX, Fidelity MSCI Communication Services Index ETF FCOM, iShares Global Comm Services ETF IXP and MicroSectors FANG+ ETN FNGS.
Earnings in Focus
Earnings per share came in at 1.17, easily outpacing the Zacks Consensus Estimate of $1.06 but declining from $1.23 in the year-ago quarter. Revenues grew 3% year over year to $69.8 billion (including traffic acquisition costs (TAC) which the company does not calculate in its headline).
Excluding TAC, the company reported revenues of $58.1 billion, well above the consensus estimate of $57.2 billion. Google’s search business returned to growth, with revenues rising 2% in the quarter. However, revenues from Google advertising declined slightly to $54.5 billion from $54.7 billion a year ago while YouTube division saw revenues of $6.7 million, down from $6.9 million in the year-ago quarter (see: all the Communication ETFs here).
The company is at the center of the industry's AI competition after the popularity of AI-based chatbot ChatGPT, launched late last year by Microsoft MSFT.
ETFs in Focus
Communication Services Select Sector SPDR Fund (XLC)
Communication Services Select Sector SPDR Fund offers exposure to companies from telecommunication services, media, entertainment and interactive media & services, and has accumulated $10.9 billion in its asset base. It follows the Communication Services Select Sector Index and holds 24 stocks in its basket, with Alphabet Class A and C shares occupying the second and third position, respectively, with a combined 24.2% share. About 47.5% of the portfolio is allocated to interactive media & services, while entertainment and media round off the next two (read: 5 ETFs Sizzle Last Week Amid Volatility).
Communication Services Select Sector SPDR Fund charges 10 bps in annual fees and trades in an average daily volume of 7 million shares. It has a Zacks ETF Rank #2 (Buy).
Vanguard Communication Services ETF (VOX)
Vanguard Communication Services ETF targets the communication sector by tracking the MSCI US Investable Market Communication Services 25/50 Index. Holding 115 stocks in its basket, both Alphabet Class A and C shares take the second and third spots, with a total of 23.6% of the portfolio. Interactive media & services is the top sector, accounting for 44.3% of the portfolio, while movies & entertainment, cable & satellite, and integrated telecommunication services round off the next three.
Vanguard Communication Services ETF has AUM of $2.7 billion and trades in a good volume of 180,000 shares a day, on average. It charges 10 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
Fidelity MSCI Communication Services Index ETF (FCOM)
Fidelity MSCI Communication Services Index ETF follows the MSCI USA IMI Communication Services 25/50 Index. It holds 111 stocks in its basket, with Alphabet both Class A and C shares occupying the second and third positions at a combined 23.7% (read: 5 Best Performing Sector ETFs of Q1).
Fidelity MSCI Communication Services Index ETF has amassed $580 million in its asset base and trades in an average daily volume of 97,000 shares. It charges 8 bps in annual fees and has a Zacks ETF Rank #2 with a Medium risk outlook.
iShares Global Comm Services ETF (IXP)
iShares Global Comm Services ETF provides global exposure to companies in media, entertainment, social media, search engine, video/gaming and telecommunication services by tracking the S&P Global 1200 Communication Services 4.5/22.5/45 Capped Index. It holds 69 stocks in its basket, with Alphabet Class A and C shares taking the second and third spot at 23.8%. Interactive media & services dominates the fund’s return at 47.5%, followed by integrated telecommunication services (19.4%).
iShares Global Comm Services ETF has amassed $267.3 million in its asset base while trading at an average daily volume of 19,000 shares. The expense ratio comes in at 0.40%. IXP has a Zacks ETF Rank #3 with a Medium risk outlook.
MicroSectors FANG+ ETN (FNGS)
MicroSectors FANG+ ETN is linked to the performance of the NYSE FANG+ Index, which is equal-dollar weighted, designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. It holds 10 equal-weighted stocks in its basket, with Alphabet accounting for a 10.3% share.
MicroSectors FANG+ ETN has accumulated $61.9 million in its asset base and charges 58 bps in annual fees. It trades in an average daily volume of 55,000 shares and has a Zacks ETF Rank #3.
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Microsoft Corporation (MSFT) : Free Stock Analysis Report
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
Vanguard Communication Services ETF (VOX): ETF Research Reports
Fidelity MSCI Communication Services Index ETF (FCOM): ETF Research Reports
iShares Global Comm Services ETF (IXP): ETF Research Reports
Communication Services Select Sector SPDR ETF (XLC): ETF Research Reports
MicroSectors FANG+ ETN (FNGS): ETF Research Reports
