VanEck's Semiconductor ETF Rides AI Boom with NVIDIA and TSMC at the Helm
The VanEck Semiconductor ETF (SMH) is positioning itself for strong growth as demand for AI infrastructure rises. The fund holds major players like NVIDIA, TSMC, and Broadcom, which dominate key areas of the semiconductor market. Analysts now expect above-average returns in the near term.
The ETF's largest individual holdings include NVIDIA at roughly 19-21% of assets, followed by TSMC at 10-10.7%. Broadcom makes up 8-12.5%, while Micron Technology and AMD account for 5% and 4.7-5%, respectively. Together, the top 10 stocks in the fund represent over 73% of its total assets.
The concentration reflects the growing dominance of these companies in AI-related sectors. TSMC, as the primary manufacturer of advanced AI chips, forecasts a compound annual growth rate (CAGR) of over 50% in AI-accelerator revenue through 2029. Meanwhile, NVIDIA and Broadcom lead in AI GPUs and networking, benefiting from the ongoing AI infrastructure boom.
Despite a trailing 12-month price-to-earnings (P/E) ratio of 43, the ETF's forward P/E stands at 23. This suggests the fund remains reasonably valued given its projected growth. Tech earnings, particularly in semiconductors, are expected to outpace the broader S&P 500 in 2026 and 2027.
The semiconductor sector continues to expand, driven by early-stage AI adoption and strong demand for related hardware. With key holdings in market-leading firms, the VanEck Semiconductor ETF is well-placed to benefit from this trend. Investors may see sustained rewards as the AI infrastructure boom develops further.
