Against the backdrop of explosive growth in artificial intelligence computing power infrastructure, the difficulty of selecting individual stocks is increasing day by day. In this context, exchange-traded funds provide an effective solution. By diversifying holdings across dozens of chip companies, investors can both participate in the AI infrastructure wave and avoid the risk of over-reliance on a single company. Among these, the iShares Semiconductor ETF (SOXX) deserves attention.
This fund holds approximately 30 constituent stocks, covering multiple key links in the chip supply chain. Among its top ten holdings are both the core AI data center chip designer Nvidia (NVDA)—this GPU giant is the dominant supplier for AI model training—and other major chip design firms such as Broadcom (AVGO) and Advanced Micro Devices (AMD), with memory specialist Micron also included in the portfolio. The fund also extends downstream into chip manufacturing equipment, with Applied Materials being one of its larger holdings. This allocation structure is quite meaningful, because AI computing power expansion benefits not only well-known chip brands but also equipment suppliers, which likewise gain from capacity expansion—a trend that has become clearly evident during this AI construction cycle.
The strength of support on the demand side is unquestionable. The combined capital expenditure guidance of the four major U.S. cloud providers for 2026 has exceeded $700 billion. In terms of expenses, the fund’s expense ratio is 0.34%, meaning approximately $3.4 per $1,000 invested annually, which is within a reasonable range for a thematic industry fund.
Of course, any investment requires weighing pros and cons. First, semiconductor funds are still essentially concentrated bets in nature, as all holdings are chip stocks and they cannot replace diversified asset allocation. However, compared with another large chip ETF—the VanEck Semiconductor ETF—this fund has a more balanced portfolio: its largest single holding accounts for only about 8% to 9%, and its top ten holdings together account for less than 60%; whereas in the VanEck fund, Nvidia alone accounts for about 15%, TSMC nearly 10%, and the top ten concentration is as high as approximately 71%. Because the iShares index imposes a weight cap on individual stocks, it effectively prevents any single stock from dominating the portfolio’s performance.
Nevertheless, both face the same cyclical risks. The semiconductor industry is strongly cyclical, and demand can experience sudden and sharp fluctuations. Even amid long-term growth trends, this sector has undergone painful downturn cycles. The substantial rise in chip stocks over the past year has already pushed up industry valuations, leaving less room for error in the market. In addition, chip funds cannot capture the full direction of trillion-dollar expenditures—a significant amount of capital will also flow into power and networking equipment sectors, which are not covered by pure semiconductor funds.
In summary, for investors who judge that the AI chip boom is still in its early stages, the iShares Semiconductor ETF offers a way to participate in computing power infrastructure construction through diversified holdings and a relatively low expense ratio. However, when buying this fund, one needs to carefully control position size. The most reliable way to ensure the ability to weather market fluctuations is never to invest more than one can comfortably hold through a downturn cycle.
