Nvidia Boosts Semiconductor ETFs Amid Chip Stocks AI Surge | ORBITAL AFFAIRS

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The Rise of Semiconductor ETFs: Nvidia Leads the Charge, But Others Join the AI Party

Semiconductor exchange-traded funds (ETFs) have been on a tear in recent months, largely thanks to the stellar performance of Nvidia. However, the landscape is shifting as a broader selection of chip stocks are now rallying on the hopes surrounding artificial intelligence (AI) technology.

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Nvidia’s Dominance

Nvidia’s stock surge has propelled it to become the most valuable company in the world, driving semiconductor ETFs heavily exposed to its shares to record highs. As a key component of the Nasdaq 100 and S&P 500, Nvidia has been a major driver of the U.S. stock market’s performance this year. The company’s stock has surged an impressive 173% year-to-date, fueled by record fiscal first-quarter revenue and a significant increase in data-center revenue compared to the previous year.

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Expanding Horizons

While Nvidia has been the standout performer, other chip stocks have started to catch up as they jump on the AI bandwagon. This shift has accelerated the semiconductor ETF rally, broadening the scope of potential investments in the sector.

TSMC, Broadcom, and Micron Power ETF Gains

The VanEck Semiconductor ETF (SMH) is a prime example of the sector’s growth potential. With approximately $23.7 billion in assets under management, the ETF boasts holdings in key players such as Nvidia, Taiwan Semiconductor Manufacturing (TSM), and Broadcom. The fund has seen an impressive 8.3% gain over the last week and a substantial 58% increase year-to-date.

Broadcom, in particular, has been on a tear, reaching an all-time high after announcing better-than-expected earnings and a stock split. The company’s stock has surged 23% in the past seven days and is up over 62% since the beginning of the year. Similarly, TSM shares have seen an 8.7% increase in the past week and a remarkable 74% gain year-to-date.

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Other chip ETFs are also performing well, with the iShares Semiconductor ETF (SOXX) showing a 6.5% increase over the last week and a solid 35% gain year-to-date. The fund’s top holdings include Nvidia, Broadcom, Qualcomm, and Micron Technology, showcasing the diversity and strength of the semiconductor sector.

Analyst Upgrades and Price Targets

Bank of America recently raised its price target on Micron to $170 from $144, citing the company as a “top U.S. memory company.” Micron’s shares have surged 13.6% in the past week and an impressive 80% year-to-date. Qualcomm has also seen positive momentum, with its stock returning 8.9% and 58.4% over the same periods, respectively.

Conclusion

The semiconductor sector is experiencing a period of significant growth and innovation, driven by advancements in AI technology and the performance of key players like Nvidia. While Nvidia continues to lead the charge, other chip stocks are now joining the AI party, fueling further gains in semiconductor ETFs. Investors looking to capitalize on this trend should consider diversifying their portfolios to include a range of chip stocks and ETFs poised for growth in the evolving tech landscape.

For more insights and updates on the semiconductor market, visit Investopedia.

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