Nvidia (NVDA) has emerged as the most valuable company globally amidst its remarkable stock surge, significantly boosting semiconductor exchange-traded funds (ETFs) heavily invested in its shares to unprecedented levels.
As a pivotal component of both the Nasdaq 100 and S&P 500 indices, Nvidia has played a crucial role in driving the U.S. stock market’s performance this year. The company’s stock has skyrocketed by 173% year-to-date, fueled by record fiscal first-quarter revenue and a substantial five-fold increase in its data-center revenue compared to the previous year.
While other chip stocks have shown commendable performance, Nvidia’s ascent has been particularly notable. Recently, however, several other semiconductor stocks have also joined the AI technology boom, further bolstering the rally in semiconductor ETFs.
ETF Performance and Key Holdings:
The VanEck Semiconductor ETF (SMH), managing approximately $23.7 billion in assets, highlights Nvidia as its largest holding, comprising 24.6% of its portfolio. In addition to Nvidia, SMH includes Taiwan Semiconductor Manufacturing (TSM) with a 12.76% holding and Broadcom (AVGO) at 8.76%. The ETF has surged by 8.3% over the past week and has gained approximately 58% year-to-date.
Broadcom recently reached an all-time high following better-than-expected earnings and a 10-for-1 stock split announcement. Its stock has risen by 23% in the last seven days and is up more than 62% since the beginning of the year. TSM shares have also performed strongly, increasing by 8.7% in the past week and posting a gain of roughly 74% year-to-date.
The iShares Semiconductor ETF (SOXX), managing $16 billion in assets, has also shown robust performance, climbing by 6.5% over the last week and approximately 35% year-to-date. Nvidia and Broadcom are its top holdings, followed by Qualcomm (QCOM) and Micron Technology (MU).
Individual Stock Performances:
Micron Technology (MU) has received a bullish price target upgrade from Bank of America to $170 from $144, labeling it as a “top U.S. memory company.” Micron’s shares have surged by 13.6% in the past week and are up by about 80% year-to-date. Qualcomm has also shown strong performance, with its stock gaining 8.9% in the last week and 58.4% year-to-date.
The overall semiconductor sector’s robust performance reflects the growing investor confidence in AI and related technologies, underscoring the sector’s pivotal role in driving market gains amidst broader economic uncertainties.
As Nvidia continues to lead the charge, its influence on semiconductor ETFs remains profound, positioning these funds as key beneficiaries of the ongoing technological boom in AI and semiconductor innovation.
