The artificial intelligence boom has sent demand for chips into overdrive, and three of the biggest names, Nvidia (NVDA), AMD (AMD), and Broadcom (AVGO), are right in the center of it. Together, they are fueling one of the most concentrated exchange-traded funds in the market: the iShares Semiconductor ETF (SOXX). For investors, this ETF has the potential to turn $250,000 into $1 million if chip demand continues to climb.
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The ETF Bets on on AI Hardware Leaders
The iShares Semiconductor ETF is laser-focused on chipmakers that design and supply the parts powering today’s AI infrastructure. Nvidia, AMD, and Broadcom are among its largest holdings, each making up more than 8% of the portfolio.
AMD has been gaining traction with its MI350 GPUs, now adopted by Oracle’s (ORCL) data centers. Its upcoming MI400 chips, expected in 2026, promise tenfold power improvements. Nvidia still holds the crown with its Blackwell Ultra GPUs, which dominate AI reasoning models and bring in twelve times more revenue than AMD in the data center. Broadcom adds a different angle with custom AI accelerators and high-speed networking equipment like its Tomahawk Ultra switches.
These three stocks have delivered an average return of 550% since the start of the AI boom in 2023. Their performance is a key reason the ETF has become one of the most powerful ways to get in on the semiconductor action.
The Fund Has a Strong Track Record
Since its launch in 2001, the iShares Semiconductor ETF has returned an average of 11.4% annually, easily beating the S&P 500’s (SPX) 8.5% over the same period. More recently, the fund has surged at an even faster pace, delivering 24.1% annualized returns in the last decade as cloud computing, enterprise software, and AI adoption skyrocketed.
At that growth rate, a $250,000 investment could become $1 million in just seven years. Even at its long-term historical pace of 11.4%, the ETF could hit the same milestone in about 13 years.
AI Spending Could Keep the Rally Alive
Of course, sustaining 24% growth over the long haul is no easy task, especially as giants like Nvidia face the law of large numbers. But the semiconductor industry still has room to grow. Nvidia CEO Jensen Huang recently said AI infrastructure spending could reach $4 trillion by 2030. If he is right, demand for chips—and the companies that make them—could remain strong for years.
That leaves the iShares Semiconductor ETF in a sweet spot. By spreading exposure across 30 chipmakers, it provides investors with a diversified way to capture the growth of AI while protecting against the volatility that comes with picking a single stock.
Is the iShares Semiconductor ETF (SOXX) a Good Buy?
Wall Street remains constructive on the iShares Semiconductor ETF, with 31 analysts weighing in over the past three months. The fund currently carries a Moderate Buy consensus, backed by 25 Buy ratings, five Holds, and just one Sell.
The average 12-month SOXX price target sits at $273.57, which represents about a 12% upside from the latest price.
