Although investors may adjust their return expectations for the technology sector after the explosive growth of the past two years, the tech industry as a whole continues to maintain solid momentum in 2026. Market attention often focuses on the “Magnificent Seven”—Nvidia (NVDA), Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOG), Meta Platforms (META), and Tesla (TSLA)—but companies within the tech sector that specialize in the semiconductor subsector have ranked among the best performers so far this year.
The iShares Semiconductor ETF (SOXX) is a typical representative of this trend. The fund has posted a cumulative gain of 89% year-to-date. Despite the solid overall return, its performance has been lackluster over the past month, with the ETF falling 4%.
Even so, some analysts believe that SOXX will still outperform mainstream tech ETFs such as the Invesco Nasdaq-100 ETF, the Vanguard Information Technology ETF, and the State Street Technology Select Sector SPDR ETF for the full year of 2026.
SOXX holds 30 semiconductor-related stocks, covering chip design firms (such as Nvidia), memory chip manufacturers (such as Micron Technology), network equipment design companies (such as Broadcom), and foundry producers responsible for chip manufacturing (such as TSMC). As the current artificial intelligence boom continues to heat up, the critical role of semiconductors in the tech world has become increasingly prominent. SOXX offers an investment vehicle that allows investors to benefit from surging chip demand without having to pick individual stocks, which explains why the ETF has risen 130% over the past year.
Most of the leading companies driving SOXX higher operate in cyclical industries and are currently benefiting from an upswing in the sector cycle. Strong demand for their products gives them pricing power and has pushed many of these companies to record profits and margins. Although this situation will not last forever—hence the semiconductor industry is considered cyclical—the primary factor fueling growth, namely supply-demand imbalance, is expected to persist at least through most of next year.
Other tech-sector ETFs, such as the Invesco Nasdaq-100 ETF, the Vanguard Information Technology ETF, and the State Street Technology Select Sector SPDR ETF, have also started the year strongly, rising 16%, 22%, and 25% year-to-date, respectively. All three ETFs are expected to outperform the broader market for the full year, but their top ten holdings are precisely the reason they may underperform SOXX.
Nvidia, Apple, and Microsoft all carry significant weight in these three ETFs, whereas SOXX includes only Nvidia among them. In my view, the semiconductor companies leading SOXX’s advance, given their cyclical peak positioning and relatively lower valuations, are more likely to maintain their leading edge.
It should be noted that SOXX does not cover many other important technology companies. When constructing a tech-sector portfolio, investors may consider SOXX as a complementary allocation focused on the core semiconductor segment, in order to capture the growth opportunities of this strategically important industry.
