The iShares Semiconductor ETF (NASDAQ:SOXX) is a fund that invests solely in U.S. companies focused on designing and manufacturing chips and components, especially within the artificial intelligence (AI) sector.
This focus has led the Fund to hold notable stocks like Micron Technology, Advanced Micro Devices, and Nvidia, which has resulted in a striking 108% return in 2026 thus far, a sharp contrast to the S&P 500 (SNPINDEX: ^GSPC), which has seen only a 10% rise this year.
I forgot Nvidia back in 2009. Now, it seems like a similar unusual signal is appearing again. Back in 2009, a “double down” signal pointed to Nvidia when it was a relatively unknown chipmaker. Now, it seems a company significantly smaller than Nvidia is showing the same “full conviction” signal.
Is there still an opening for investors to jump into the iShares ETF, or have they missed their chance? Well, the situation might not be as straightforward as one could think.
A focused portfolio of top U.S. chip stocks
The iShares Semiconductor ETF comprises just 30 stocks, making it quite focused. Its top ten holdings alone represent 62.2% of the portfolio’s value, and this list includes nearly all major suppliers in the AI industry.
|
Stock |
iShares ETF Portfolio Weighting |
|---|---|
|
1. Micron Technology |
11.21% |
|
2. Advanced Micro Devices |
8.98% |
|
3. Marvell Technology |
8.06% |
|
4. Intel |
6.43% |
|
5. Broadcom |
5.63% |
|
6. Nvidia |
5.46% |
|
7. Applied Materials |
5.35% |
|
8. KLA Corporation |
3.93% |
|
9. Lam Research |
3.69% |
|
10. Qualcomm |
3.50% |
Data from iShares indicates these 10 stocks have yielded an average return of 136% this year, which explains why the iShares Semiconductor ETF has significantly outpaced the S&P 500.
Micron Technology has excelled largely due to the skyrocketing demand for its high-bandwidth memory (HBM) crucial for data centers—a key element in the AI hardware landscape. Micron is set to report its operating results for the fiscal third quarter of 2026 (ending May 31) soon, and management suggests sales could rise sharply, potentially surging profits.
Intel is also enjoying a boost, primarily driven by heightened demand for its data center central processing units (CPUs). Some AI tasks are actually more efficiently handled by CPUs than by their graphics processing unit (GPU) counterparts. Indeed, Intel CPUs empower AI systems to autonomously organize tasks and consistently access various software tools. Additionally, AI is revitalizing Intel’s foundry business as clients rush to secure production capabilities in light of the ongoing semiconductor shortage.
Is the iShares Semiconductor ETF still a good buy?
Since its launch in 2001, the iShares Semiconductor ETF has averaged a yearly return of 14.9%, surpassing the S&P 500’s average of 8.5%. So, it’s not just a one-time thing for it to outperform the market in 2026.
From this angle, the iShares ETF seems like a solid pick for a well-rounded investment portfolio. Yet, one should tread carefully considering the swift increases in some of its largest holdings. Micron, for instance, is currently benefiting from the largest supply-demand imbalance in memory chip history, allowing it to dictate pricing. Thus, profit margins are exceptionally high.
However, this might not last. The industry is ramping up production, and as supply catches up with demand, companies like Micron may find it challenging to sustain such high profit levels.
Looking at demand, there could be signs of stress. Recently, Alphabet‘s CEO, Sundar Pichai, mentioned they are addressing customer complaints regarding rising AI costs. In a similar vein, the COOs of Uber Technologies have disclosed that justifying their AI expenditures is becoming increasingly tough. If this sentiment spreads, overall chip demand might decline.
In summary, it might still be worthwhile to consider buying the iShares Semiconductor ETF due to its solid history, but the potential for volatility has undoubtedly escalated. Thus, maintaining a long-term investment outlook—perhaps five years or more—becomes all the more crucial.
Should you think about purchasing the iShares Semiconductor ETF stock now?
Before making a decision to invest in the iShares Semiconductor ETF, consider this:
Our analysts have pinpointed various stocks they believe are…
10 promising stocks… So, while the iShares Semiconductor ETF is not currently among those recommended, the chosen stocks are geared toward long-term growth and could deliver impressive returns in the coming years.
For perspective, if you had invested $1,000 in Netflix back when it was initially recommended, you would now have approximately $424,531. Likewise, an investment in Nvidia during its recommendation would now be worth around $1,273,016.
*Stock Advisor will return on June 18, 2026.
