Big tech names like Microsoft, Amazon, Alphabet, Meta Platforms, and Oracle are gearing up to invest hundreds of billions of dollars in infrastructure by 2026. A significant portion of this will be funneled into artificial intelligence (AI) infrastructure, with semiconductor chips playing a key role.
If you’re looking to tap into this trend with a single ETF, the VanEck Semiconductor ETF (NASDAQ:SMH) could be a good fit. It’s been performing impressively, up 71% year-to-date as of June 16, following a 49% return in 2025. Over the past five years, it boasts an average annual return of just over 38%.
Interestingly, there’s a signal reminiscent of a 2009 moment involving Nvidia, where a “double down” signal emerged for an obscure chipmaker. Now, a company much smaller than Nvidia is showing the same “full conviction” sign.
SMH Portfolio Construction Method
The SMH tracks the MVIS US listed semiconductor companies 25 index, which is a market capitalization-weighted index of the top 25 publicly traded semiconductor firms in the U.S. This structure tends to favor larger companies; Nvidia and Taiwan Semiconductor alone make up about 25% of the portfolio, and adding Micron, AMD, and Intel pushes it to nearly half.
| Company | Weight |
|---|---|
| Nvidia | 14.5% |
| Taiwan Semiconductor Manufacturing | 9.3% |
| Micron Technology | 8% |
| Advanced Micro Devices | 7.3% |
| Intel | 7.2% |
But this concentration is impacting sector leaders significantly. Other ETFs, like the iShares Semiconductor ETF (NASDAQ: SOXX), show a trend towards larger stocks, but there’s also a slight shift towards smaller mid-cap stocks. It may seem like a minor change, but it could affect performance depending on market conditions.
SMH vs. Competitors
When considering alternatives to the VanEck Semiconductor ETF, two notable options are the iShares Semiconductor ETF and the Invesco PHLX Semiconductor ETF (NASDAQ: SOXQ). These two can be compared since they share similar selection criteria, with about 74% overlap. Still, the expense ratio is where they differ; SOXQ has a lower expense ratio of 0.19%, almost half that of SOXX.
So, if you prefer focused exposure to big companies in this sector, VanEck’s ETF might be more suitable. In contrast, Invesco targets smaller businesses within the semiconductor field.
Megacaps have been the drivers of this bull market during the AI boom. We might see this trend continue, although it hasn’t been entirely consistent so far. As the growth cycle develops, long-term winners may emerge.
At this point, as long as the largest firms keep winning, the VanEck Semiconductor ETF seems positioned to excel.
Should You Buy VanEck ETF Trust – VanEck Semiconductor ETF Stock Now?
Before buying shares in the VanEck ETF Trust – VanEck Semiconductor ETF, consider this:
Analysts have identified a set of ten stocks that they recommend for potential growth and impressive returns over the next few years, and the VanEck ETF isn’t on that list. So, if you’re looking for long-term growth, you might want to explore those options.
Performance speaks volumes; the track record shows it’s outperformed the S&P 500 significantly. Don’t overlook the latest top picks from analysts.
*Stock Advisor will return on June 20, 2026.
