Intel (INTC - Analyst Report), the world’s largest chipmaker, reported solid Q4 results after the market closed yesterday. The company surpassed our estimates on both revenues and earnings but gave a disappointing first-quarter revenue outlook.

Intel Q4 Earnings in Focus

Earnings of 74 cents per share came in 11 cents higher than the Zacks Consensus Estimate but were flat with the year-ago quarter. Revenues rose 1% year over year to $14.9 billion and were well ahead of our estimated $14.8 billion. Better-than-expected results were credited to strong growth in memory, data centers, and the Internet of Things that more than offset sluggish PC sales (see: all the Technology ETFs here).

However, gross margin fell to 64.3% from 65.4% in the year-ago quarter but surpassed the company’s forecast of 62%.

While the three new business units accounted for 40% of the company’s revenues, the PC market still accounts for the remaining portion. The weakness in the PC market is expected to persist going forward, as soft global economic growth, especially in China, will continue to hurt demand for personal computers and servers thereby weighing on the company’s top line.

As a result, Intel expects revenues in the range of $13.6–$14.6 billion for the first quarter of 2015. The midpoint is well below the Zacks Consensus Estimate of $13.76 billion. For fiscal 2016, revenues are expected to grow in mid-to-high single digits. Gross margin is expected to be around 62% for the ongoing quarter and 63% for the full year.

Despite the earnings and revenue beat, INTC shares dropped as much as 5.6% in after-market hours on elevated volume.

Time to Buy?

While the chipmaker is grappling with slower PC business and falling gross margin, its data center business is growing in double digits, and memory and the Internet of Things are fueling growth. Additionally, the recently completed acquisition of Altera will soon start contributing to the earnings and give a big boost to areas such as data center, Internet of things and intelligent systems.

Intel has outpaced the broader market since the start of the year in spite of a brutal market downturn, falling 5% against loss of 6% each for the S&P 500 and the S&P 500 information technology sector. This suggests its strong resilience to the market downturn. Further, the stock has a compelling valuation with P/E of 13.47 at current levels and a dividend yield of 3.01%, indicating that it is a solid pick for investors seeking cheap and steady income in the current turmoil (read: 6 Incredible ETFs & Stocks on Sale).  

As a result, Intel currently has a Zacks Rank #3 (Hold) with a solid Value and Growth Style Score of ‘B’ each.

ETFs in Focus

Investors seeking to tap the beaten down prices while simultaneously taking advantage of strong growth prospects could consider the ETFs that have a large allocation to the biggest semiconductor company.

Market Vectors Semiconductor ETF (SMH - ETF report)

This is one of the popular and liquid ETFs in the semiconductor space with AUM of $243.1 million and average daily volume of roughly 3.5 million shares. The fund provides exposure to 26 global securities by tracking the Market Vectors US Listed Semiconductor 25 Index. Intel occupies the top position with 18.6% of assets. While U.S. firms dominate the fund holdings at 68.2% of assets, Taiwan (13.5%), the Netherlands (8.9%) and Singapore (4.5%) round off to the top four in terms of country exposure. The fund charges an expense ratio of 0.35%. The fund has a Zacks Rank of 3 or ‘Hold’ rating with a High risk outlook.

iShares PHLX Semiconductor ETF (SOXX - ETF report)

This ETF follows the PHLX SOX Semiconductor Sector Index and offers exposure to 30 U.S. firms. The fund has amassed $409.3 million in its asset base and trades in volume of more than 605,000 shares a day. The product charges a higher fee of 48 bps a year from investors. Here, INTC takes the third spot at 8.3% of total assets. The fund has a Zacks Rank of 3 with a High risk outlook.

First Trust NASDAQ Technology Dividend Index Fund (TDIV - ETF report)

This fund provides exposure to the dividend payers in the technology sector by tracking the Nasdaq Technology Dividend Index. It has amassed about $482.9 million in its asset base and trades in good volume of about 98,000 shares per day. The ETF charges 50 bps in annual fees and holds about 97 securities in its basket. Of these firms, INTC occupies the third position, making up roughly 8.2% of the assets. In terms of industrial exposure, the fund allocates nearly one-fifth portion in semiconductor and semiconductor equipment, followed by technology hardware, storage & peripherals, software, diversified telecom services, and communications equipment with at least 14% share each (read: Stocks and ETFs for Warren Buffett Fans).
 
PowerShares Dynamic Semiconductors Fund (PSI - ETF report)

This fund tracks the Dynamic Semiconductor Intellidex Index, holding 29 U.S. securities in the basket. Intel makes up for 5.7% share in the basket. PSI has lower AUM of $55.4 million and sees a lower average daily volume of about 25,000 shares. The expense ratio comes in at 0.63%. The product has a Zacks Rank of 3 with a High risk outlook.