ETFs
Nvidia Turbocharges Semiconductor ETFs Even as Other Chip Stocks Join the AI Party
Key takeaways
- Semiconductor exchange-traded funds (ETFs) have been buoyed by Nvidia’s performance in recent months, but now a broader selection of chip stocks are rallying behind AI hopes.
- The VanEck Semiconductor ETF has gained 8.3% over the past week, driven by a nearly 23% gain at Broadcom during that period.
- Micron Technology has been another chip star over the past week, earning an upgrade from analysts at BofA Securities.
from Nvidia (NVDA) the rise in stocks made it the most valuable company in the worldpowering the semiconductor exchange-traded funds (ETFs) heavily exposed to its stocks at record highs.
As a key component of the Nasdaq 100 and S&P 500, Nvidia has been a key driver of the U.S. stock market’s performance this year. The company has surged 173% year-to-date after releasing a report record turnover in the first quarter and a quintupling of its data center revenues year over year.
The performance of other chip stocks, while commendable, seems sluggish in comparison. But in recent days, other chip titles have joined the group. artificial intelligence (AI) gold rush, accelerating the rally of semiconductor ETFs.
Gains in TSMC, Broadcom and Micron Power ETFs
The VanEck Semiconductor ETF (SMH), for example, has approximately $23.7 billion in assets under management (AUM) and count Nvidia as its largest holding, at 24.6% of the portfolio.
However, the fund also holds a 12.76% stake in Taiwan Semiconductor Manufacturing (TSM) and an 8.76% stake in Broadcom (AVGO). The ETF is up 8.3% over the past week and about 58% year to date.
Broadcom has reached a record level last week after reporting better-than-expected earnings and a 10-to-1 stock split. Its stock is up about 23% over the past seven days while gaining more than 62% year to date. TSM shares gained about 8.7% last week and are up about 74% year to date.
Other chip ETFs are also performing well, with the $16 billion iShares Semiconductor ETF (SOXX) up 6.5% over the past week and around 35% year to date. The fund has Nvidia (11.23%) and Broadcom (9.55%) as its top holdings, but its third and fourth holdings are Qualcomm (QCOM) (with 7.46%) and Micron Technology (UM) (at 5.58%), respectively.
Bank of America raised its price target on Micron at $170 compared to $144 yesterday, calling it a “great American memory company.” The company’s shares gained 13.6% last week and are up about 80% year to date. Qualcomm stock returned 8.9% and 58.4%, respectively, over the same period.