Key Points
Nvidia (NASDAQ: NVDA) is a leading player in the AI stock boom, experiencing significant competitive pressure from AMD and an increasing number of clients seeking in-house semiconductor solutions. TSMC (NYSE: TSM) remains the main third-party chip manufacturer, although it faces a potential resurgence from Intel, which has recently invested heavily in its foundry business. TSMC’s operations are further complicated by geopolitical risks associated with its Taiwan headquarters.
The VanEck Semiconductor ETF (NASDAQ: SMH), established in 2011, has outperformed the S&P 500, largely due to its significant holdings in high-growth companies. Currently, Nvidia comprises 19.3% of the ETF, while TSMC accounts for 10.2%. As the demand for semiconductors is expected to grow alongside technological advancements, SMH may provide a stable investment option even if the AI boom stabilizes.
Nvidia recently reported a 62% revenue growth, and Micron’s earnings per share is projected to quadruple this year. The SMH ETF carries a trailing price-to-earnings ratio of 46, but analysts suggest it may be undervalued when considering future growth potential.
