Semiconductor-focused ETFs outperform as AI demand drives earnings growth despite valuation concerns and sector rotation.
The S&P 500’s technology sector remains the top performer in 2026, fueled by sustained demand for artificial intelligence infrastructure. Semiconductor stocks, particularly second-tier players like Micron Technology and Sandisk, have overtaken megacap leaders, while Intel shows signs of recovery.
The VanEck Semiconductor ETF (SMH) tracks 25 stocks, with Nvidia and Taiwan Semiconductor Manufacturing comprising 30% of its holdings. Despite concentration risks, the fund trades at 24 times forward earnings, aligning with earnings growth projections.
Corporate earnings provide support, though some industry segments show fatigue. AI-focused ETFs continue to attract investor interest as the sector drives broader market gains.