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Key Takeaways
- Semiconductor exchange-traded funds (ETFs) have been buoyed by the performance of Nvidia in recent months, but now a broader selection of chip stocks are rallying on AI hopes.
- The VanEck Semiconductor ETF has gained 8.3% over the last week, driven by a nearly 23% gain in Broadcom over that period.
- Micron Technology was another star chip performer over the last week, earning an upgrade from BofA Securities analysts.
Nvidia’s (NVDA) stock surge has made it the most valuable company in the world, propelling semiconductor exchange-traded funds (ETFs) heavily exposed to its shares to record highs.
As a key component of the Nasdaq 100 and S&P 500, Nvidia has been a key driver of the U.S. stock market’s performance this year. The company has surged 173% year-to-date after reporting record fiscal first-quarter revenue and a quintupling of its data-center revenue year-on-year.
The performance of other chip stocks, though commendable, has seemed sluggish in comparison. But, in recent days, other chip stocks have joined the artificial intelligence (AI) gold rush, accelerating the semiconductor ETF rally.
TSMC, Broadcom and Micron Power ETF Gains
The VanEck Semiconductor ETF (SMH), for example, has about $23.7 billion in assets under management (AUM) and counts Nvidia as its largest holding, at 24.6% of the portfolio.
However, the fund also has a 12.76% holding in Taiwan Semiconductor Manufacturing (TSM) and an 8.76% holding in Broadcom (AVGO). The ETF is up 8.3% over the last week and about 58% year-to- date.
Broadcom surged to an all-time high last week after announcing better-than-expected earnings and a 10-for-1 stock split. Its stock has risen about 23% in the past seven days while gaining more than 62% year-to-date. TSM shares have gained about 8.7% in the past week and are up roughly 74% since the beginning of the year.
Other chip ETFs are also performing well, with the $16 billion iShares Semiconductor ETF (SOXX) up 6.5% over the last week and around 35% year-to-date. The fund has Nvidia (11.23%) and Broadcom (9.55%) as its largest holdings but its third and fourth largest holdings are Qualcomm (QCOM) (with 7.46%) and Micron Technology (MU) (at 5.58%), respectively.
Bank of America lifted its price target on Micron to $170 from $144 yesterday, calling it a “top U.S. memory company.” The company’s shares have gained 13.6% in the past week and are up roughly 80% year-to-date. Qualcomm stock has returned 8.9% and 58.4% over the same period respectively.