Meet the Super Semiconductor ETF With 40% of Its Portfolio Parked in Micron, AMD, Broadcom, Nvidia, and Intel

Broadcom is one of the biggest players in the AI accelerator space. It’s helping five major customers, including OpenAI, Meta Platforms, and Alphabet, design and fabricate custom data center chips. However, Broadcom is also one of the semiconductor industry’s top suppliers of networking equipment.

GPUs and accelerators can’t operate at their full potential without high-bandwidth memory (HBM) or central processors (CPUs). Micron supplies some of the best HBM, and Intel supplies some of the best CPUs, so both these companies are also benefiting from the AI boom.

Micron, AMD, Broadcom, Nvidia, and Intel have produced an average return of 860% since the start of 2023, so they have been a massive source of upside for this iShares ETF.

The iShares ETF has a stellar long-term track record

Investors who bought the iShares Semiconductor ETF when it launched in 2001 would have earned a compound annual return of 14% to date. They would be crushing the broader market, because the S&P 500 has returned just 8.4% per year over the same period.

AI is just one of many technological revolutions that spurred demand for computing hardware over the last 25 years. The dawn of the internet, personal computers, smartphones, enterprise software, and cloud computing fostered sales growth across the entire semiconductor industry.

But there’s no doubt that AI is the industry’s biggest opportunity so far, which is why the iShares Semiconductor ETF has delivered an above-average compound annual return of 50% over the last three years. Amazon, Microsoft, Alphabet, and Meta Platforms are three of the largest buyers of data center chips and components right now. Based on their most recent forecasts, they will spend a combined $710 billion on AI infrastructure during 2026 alone.

As a result, Huang’s prediction that industrywide spending could reach $4 trillion by 2030 sounds plausible, as long as companies can effectively monetize their AI software to fund further investments in infrastructure. If spending does grow to that level, the iShares Semiconductor ETF is likely to deliver more upside over the next few years.

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Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Broadcom, Intel, Meta Platforms, Micron Technology, Microsoft, Nvidia, and iShares Trust-iShares Semiconductor ETF. The Motley Fool has a disclosure policy.

Meet the Super Semiconductor ETF With 40% of Its Portfolio Parked in Micron, AMD, Broadcom, Nvidia, and Intel was originally published by The Motley Fool