Nvidia CEO Jensen Huang forecasts that data center operators will spend $1 trillion annually on chips and infrastructure by 2028 to accommodate the growing demand for computing power from next-generation artificial intelligence (AI) models. This anticipated spending will significantly benefit Nvidia, the leading supplier of data center chips for AI development, as well as its competitors and hardware suppliers.
The iShares Semiconductor ETF (NASDAQ: SOXX), which exclusively invests in semiconductor suppliers including Nvidia, Broadcom, and Advanced Micro Devices (AMD), has shown strong performance since its inception in 2001. It aims to leverage the rapid growth in AI, with the potential for a $250,000 investment to exceed $1 million in a decade if the ETF continues its annual gains of around 20.9%.
Nvidia’s chips are currently essential for AI model development, with some models requiring up to 1,000 times more computing capacity than older versions. Major customers include Amazon, Microsoft, and Alphabet, who are heavily investing in AI infrastructure to meet the increasing demand.
