Leading Chip ETF Achieves 14% Annual Growth Since 2001 with 118% Surge in Last Year

The iShares Semiconductor ETF Sees Record Gains

The iShares Semiconductor ETF (NASDAQ: SOXX) has achieved a remarkable return of approximately 118% over the past year, significantly outpacing its long-term average annual return of 14.2% since its inception in July 2001. The fund, which currently holds around $43 billion in assets, is largely driven by the surge in demand for graphics processing units (GPUs) and artificial intelligence infrastructure.

This performance is unprecedented for the ETF; historically, only two other 12-month periods approached this level of gain: about 97% in January 2004 and around 109% in March 2021. However, past trends indicate that while immediate returns were high, the subsequent years often saw significant declines, with prior peaks resulting in losses of about 23% and 35% in following years, respectively.

Current valuations suggest a high-risk scenario, with the ETF’s holdings priced at about 67 times earnings. Key positions include Nvidia and Advanced Micro Devices, each making up more than 8% of the ETF. Investors are now faced with the question of whether to pursue this ETF amidst concerns of a potential downturn in the coming year.