The iShares Semiconductor ETF (SOXX) is an exchange-traded fund focused on companies engaged in chip design, manufacturing, and distribution, with a particular emphasis on semiconductor companies in the artificial intelligence (AI) sector. The ETF holds 30 semiconductor stocks, but its assets are highly concentrated in its top four holdings: Intel (INTC), Advanced Micro Devices (AMD), Micron Technology (MU), and Nvidia (NVDA). The strong rally of these four stocks in 2026 has driven the ETF’s year-to-date return to as high as 90%.
Since the AI boom began in early 2023, the median return of Intel, AMD, Micron Technology, and Nvidia has reached as high as 1,160%, more than ten times the return of the S&P 500 Index over the same period. The ETF allocates more than one-third of its assets to these four stocks.
Intel is actively expanding into the AI field through its Gaudi series of data center accelerators, while also launching Core Ultra processors, enabling personal computing devices to run some AI workloads locally. However, in the data center sector, Intel still lags behind AMD and Nvidia. The graphics processing units (GPUs) produced by these two companies are the preferred chips for running large-scale AI workloads. Nvidia’s Vera Rubin GPU system has set the industry benchmark, while AMD’s new MI450 GPU, when paired with its dedicated Helios rack, has become a strong alternative.
The deployment of AI data center systems by these chipmakers is inseparable from high-bandwidth memory (HBM), and Micron Technology is one of the industry’s top suppliers. HBM ensures the seamless flow of data to data center processors, preventing bottlenecks in applications such as AI chatbots and intelligent agents. In addition to its top four holdings, the ETF also holds companies such as Broadcom, SK Hynix, and TSMC.
Since its launch in 2001, the ETF has achieved a compound annual return of 14.2%, outperforming the S&P 500 Index’s average annual return of about 9% over the same period. In addition to the current AI boom, the ETF has also benefited over the past twenty-five years from the widespread adoption of technologies such as smartphones, enterprise software, and cloud computing.
The AI industry is likely to remain a major source of semiconductor demand for many years to come, but the returns since early 2023 are difficult to sustain. Most semiconductor companies currently have unusually high profit margins because a global supply shortage has allowed them to dominate pricing. As new manufacturing capacity comes online, this situation will change, and industry-wide earnings will come under pressure in the coming years.
Therefore, investors should buy the iShares Semiconductor ETF as part of a diversified portfolio. The ETF is expected to deliver positive returns over the long term, and this strategy helps minimize the impact of potential volatility.
The iShares Semiconductor ETF achieved a 90% year-to-date return in 2026 thanks to its concentrated holdings in AI hardware leaders such as Intel, AMD, Micron Technology, and Nvidia, and its long-term compound annual return has also outperformed the S&P 500 Index. However, current high profit margins are difficult to sustain, and the coming online of new capacity will put pressure on industry earnings. For investors hoping to gain exposure to the AI hardware sector, making the ETF a supplement to a diversified portfolio rather than betting everything on it is a more prudent strategy.
