Throughout the bull market for tech and artificial intelligence (AI) of the past few years, semiconductor stocks have been the leaders. That narrative has changed in 2026 as investors grow more concerned about how much money is being spent on AI development and whether valuations have become stretched too far. Semiconductor ETFs still aren't too far off all-time highs, but it looks like momentum has clearly shifted away from tech and growth stocks. That doesn't mean this group can't keep moving higher, bu ...

Investors may view the technology sector as sprawling, and they wouldn't be entirely off-base. The Technology Select Sector index, which houses the S&P 500's tech components, includes 70 stocks from seven industries. As a result, tech exchange-traded funds (ETFs) can also deliver disparate performances, and what's playing out in the early stages of 2026 is a reminder of that fact. For example, the tech-heavy Nasdaq-100 is off 2% this year. A 2% dip in less than two months is enough for many investors to en ...

Artificial intelligence (AI) is the fastest-growing secular trend today, and it's still in its early stages. So, there should be plenty of growth opportunities for long-term investors. Nvidia (NASDAQ: NVDA) rightfully receives much attention in the AI space, as its graphics processing units (GPUs) are widely considered the "gold standard" for training AI models and deploying AI applications. Micron Technologies (NASDAQ: MU) has also been garnering significant recent coverage in the financial press. Its sto ...

The VanEck Semiconductor ETF (NYSEARCA:SMH) manages $44.1 billion in assets but delivers a minimal 0.24% yield. ...

Core Viewpoint - There are potential opportunities for significant gains in the software sector for investors willing to take a contrarian approach, as software stocks have faced substantial declines recently [1]. Group 1: Market Performance - Software stocks have been severely impacted in recent weeks, continuing a downward trend into the new year [1]. - On January 2, the VanEck Semiconductor ETF (SMH) outperformed the iShares Expanded Tech-Software Sector ETF (IGV) by 6.6 percentage points, marking the second-largest daily divergence on record according to Dow Jones Market Data [1].

Core Insights - Artificial intelligence (AI) is initiating a significant infrastructure investment cycle in the technology sector, with 90% of AI investors planning to maintain or increase their exposure in the next year [2] - Global AI-related data center capital expenditures are projected to reach $527 billion by 2026, primarily benefiting a select group of semiconductor companies [3] Investment Opportunity - The VanEck Semiconductor ETF (SMH) offers concentrated exposure to leading AI companies, with its top five holdings accounting for approximately 49.8% of its assets, providing investors with a diversified yet focused investment in the AI sector [5] - SMH has demonstrated robust performance, achieving a 49% gain in 2025, significantly outperforming the S&P 500's 16.4% return [6] Long-term Growth Potential - The shift from training large language models to inference workloads is expected to drive AI compute demand, with inference projected to account for two-thirds of total demand by 2026, indicating sustained growth for hardware such as GPUs and memory chips [9] - SMH's long-term track record shows annualized returns of around 30.9% over the past decade, outperforming the S&P 500's 12.9% annualized return during the same period [8] Valuation Metrics - Currently, SMH is trading at nearly 33 times trailing-12-month earnings, aligning with the price-to-earnings multiples of many large-cap tech stocks, making it a suitable choice for investors seeking AI exposure without selecting individual stocks [10]

Core Viewpoint - Software stocks underperformed in 2025 compared to the broader market and particularly the semiconductor sector, which demonstrated significant strength [1] Group 1: Performance Comparison - The iShares Expanded Tech-Software Sector ETF experienced a modest increase of only 5% in 2025 [1] - In contrast, the VanEck Semiconductor ETF saw a substantial rise of nearly 50% during the same period [1] Group 2: Early 2026 Trends - Early indicators for 2026 show software stocks declining by 2% within the first two weeks of the year [1] - Meanwhile, semiconductor stocks have increased by 9% in the same timeframe [1]

Core Insights - The VanEck Semiconductor ETF (NASDAQ: SMH) experienced a significant rally of 48.7% in 2025, highlighting the strong performance of the semiconductor sector [1] - The semiconductor sector's unique characteristics, particularly its connection to artificial intelligence, have contributed to its outperformance compared to traditional ETFs [2] Performance Analysis - Nvidia (NASDAQ: NVDA), the largest component of the ETF at over 20%, underperformed the ETF with a gain of 38.9%, indicating that other stocks contributed more significantly to the ETF's performance [3] - Micron (NASDAQ: MU) was a major contributor to the ETF's outperformance, surging 240.2% due to increased demand for DRAM and NAND driven by AI developments [4] - Other significant performers in the ETF included Taiwan Semiconductor Manufacturing (NYSE: TSM), Broadcom (NASDAQ: AVGO), and Advanced Micro Devices (NASDAQ: AMD), which saw gains of 55.9%, 50.7%, and 77.3% respectively [6] Market Trends - The semiconductor sector is expected to continue its upward trajectory, with DRAM prices projected to increase by 50% or more in the upcoming quarter and NAND flash prices expected to rise by 30% to 40% [5] - The ETF's performance nearly tripled that of the S&P 500, indicating strong long-term growth potential in the semiconductor sector amid the ongoing AI boom [7]

Core Insights - The VanEck Semiconductor ETF provides exposure to 26 chip stocks, making it a diversified investment option in the semiconductor industry [1][3] - The ETF has been designed to balance safety with the potential for higher returns compared to traditional bank savings or fixed-income instruments [2] Fund Overview - Established in 2011, the VanEck Semiconductor ETF invests nearly all its capital in 26 chip stocks, which makes it riskier than broader funds like the S&P 500 [4] - Approximately 20% of the fund is allocated to Nvidia, with just under 11% invested in Taiwan Semiconductor, while the remaining 24 holdings each represent less than 10% [4][5] Performance and Returns - The fund has averaged nearly 31% annual returns over the past 10 years, significantly outperforming the Nasdaq-100 tracker, which averaged just over 19% [7] - Despite a 34% loss in 2022 due to a bear market, the fund has experienced more years of positive returns than losses, with a notable 49% increase projected for 2025 [8][9] Cost Structure - The VanEck ETF has an expense ratio of 0.35%, which is lower than the average expense ratio of 0.44% for actively managed funds, providing a cost-effective option for investors [6][11] Investment Considerations - Investors in the VanEck Semiconductor ETF should be prepared for higher risk compared to S&P 500 or Nasdaq index investments and should maintain a long-term perspective to navigate occasional negative returns [10]

Core Insights - The semiconductor sector has been a significant beneficiary of the AI boom, with the VanEck Semiconductor ETF (SMH) and iShares Semiconductor ETF (SOXX) being the two largest ETFs for investors seeking exposure to this market [1][7] Category Exposure - The primary distinction between the two ETFs lies in their concentration levels, with both tracking semiconductor manufacturers based on market capitalization and holding approximately 25-30 positions [2] - The VanEck ETF allows for unconstrained weighting, leading to substantial allocations for major companies like Nvidia and Taiwan Semiconductor Manufacturing, which together represent about one-third of the portfolio [3] - In contrast, the iShares ETF imposes caps on individual holdings, limiting the top five securities to 8% and other positions to 4%, while also capping American depositary receipts (ADRs) to a maximum of 10% of the portfolio [4][5] Investment Verdict - The choice between SMH and SOXX depends on the investor's preference for exposure to larger companies, with the VanEck ETF being more concentrated and tilted towards major semiconductor firms [5][6] - Given the current market conditions favoring large-cap stocks, the VanEck Semiconductor ETF is viewed as the more advantageous option at this time, although a more diversified approach may be preferable in the long term [6][8]