China is only 3 years behind the West when it comes to chip technology. What will happen to the US chip stocks when China takes the lead?
The VanEck Semiconductor ETF (SMH) will be on the spotlight as traders assess the impact of Wednesday's Nvidia earnings. The ETF, which tracks the biggest semiconductor companies, was trading at $240, down by over 14% from its highest point this year.
On Wednesday, VanEck launched the VanEck Fabless Semiconductor ETF (SMHX), the latest player in a roster of thematic equity ETFs. SMHX seeks to generate similar price and yield results to the MarketVector US Listed Fabless Semiconductor Index.
The VanEck Semiconductor ETF has been one of the best-performing exchange-traded funds of the last decade. It offers exposure to stocks like Nvidia, but with less volatility than individual stocks.
Traders anticipate a 10% move in NVIDIA stock post-earnings. VanEck Semiconductor ETF has a busy corporate event calendar ahead for semiconductor stocks, and I highlight fundamental and technical risks. SMH's valuation is high, with a focus on large-cap growth and a concentration in Information Technology holdings.
The semiconductor industry has been on fire over the last 10 years. The VanEck Semiconductor ETF's top holdings are Nvidia, Taiwan Semiconductor Manufacturing, and Broadcom.
Both of these ETFs provide major growth upside.
VanEck Semiconductor ETF is the largest semiconductor ETF with an AUM of over $23b. In my view, the semiconductor sector is one of the most attractive to have exposure to. However, the exposure the ETF provides represents the sector poorly. As the ETF is highly concentrated into companies that are dependent on each other in a low-risk environment, I rate SMH a Sell.
Semiconductors are essential to the AI revolution. Choosing an exchange-traded fund is an easy way to gain exposure to the whole market.
Designed to provide broad exposure to the Technology - Semiconductors segment of the equity market, the VanEck Semiconductor ETF (SMH) is a passively managed exchange traded fund launched on 12/20/2011.
ETFs are great investment vehicles for long-term growth. It provides investors with a simple way of taking advantage of what the stock market offers without all the downside of investing heavily in individual stocks that could cause significant losses.
The technology industry has become enamored with artificial intelligence, and opportunities in the chip space have witnessed particularly high demand. While stocks like Nvidia continue to soar, investors have alternatives that may be better suited in the long run.