Broader semiconductor ETFs with diversified holdings outpace concentrated megacap funds amid surging AI-driven capital expenditures.
The iShares Semiconductor ETF (SOXX) delivered a 103% year-to-date return, surpassing the VanEck Semiconductor ETF (SMH), which gained 75%. The performance gap highlights the advantage of broader exposure over concentrated megacap bets in the current AI-driven market rally.
Hyperscalers like Microsoft, Google, Meta, and Amazon are projected to increase combined capital expenditures to over $400 billion by 2026, up from roughly $230 billion in 2024. This spending surge has transformed semiconductors into the highest-beta equity sector, benefiting chip designers, foundries, and memory makers.
Among the top ETFs, SOXQ stands out with a 0.19% expense ratio, undercutting rivals by 16 basis points. Over a decade, this translates to roughly $3,500 in savings on a $100,000 position, further enhancing its appeal for long-term investors.