The XSD Semiconductor ETF Pops 12%, But Has an Intel Problem

"SPDR S&P Semiconductor ETF (NYSEARCA:XSD) offers equal-weight exposure to the semiconductor sector, a structure that amplifies both opportunity and risk. The fund has gained 43.15% over the past year as AI infrastructure spending supercharged demand for chips across the supply chain. The equal-weight structure - which gives smaller names the same influence as giants - has both amplified those gains and introduced drag from legacy players like Intel that have not kept pace with the AI cycle."

"At $359.71 per share as of February 18, 2026, the fund is up 11.85% year-to-date. But that performance masks a critical divergence: AI-exposed names like Micron Technology (NASDAQ:MU) are surging while legacy players like Intel (NASDAQ:INTC) struggle. The equal-weight methodology means underperformers drag returns just as much as leaders lift them. Two factors will determine whether XSD continues its run or stalls: AI infrastructure spending trajectory and the fund's quarterly rebalancing mechanics."

"Macro Factor: AI Infrastructure Spending Momentum The most important macro driver for XSD is whether hyperscalers sustain their AI infrastructure buildout through 2026. NVIDIA (NASDAQ:NVDA | NVDA Price Prediction) CEO Jensen Huang said "Blackwell sales are off the charts, and cloud GPUs are sold out" on the Q3 FY2026 earnings call. That demand is translating into explosive growth for memory suppliers."

"Revenue surged 57% year-over-year to $13.64 billion in Q1 FY26, driven by hyperscaler demand for high-bandwidth memory used in AI training clusters. That demand quality - not just volume - is what pushed Cloud Memory gross margins to 66%, a level that signals pricing power rather than commodity exposure. Retail investors have taken notice, with a post in r/stocks titled '$MU, Micron is barely starting to uncoil. Here's why.' arguing the HBM cycle is still in early innings"

XSD provides equal-weight exposure to semiconductor stocks, magnifying both winners and laggards. The fund returned 43.15% over the past year and is up 11.85% year-to-date as AI infrastructure spending boosted chip demand. AI-exposed firms like Micron are surging while legacy names such as Intel lag, and the equal-weight methodology causes underperformers to offset leaders. The outlook depends on whether hyperscalers sustain AI infrastructure buildouts through 2026 and on the fund's quarterly rebalancing mechanics. Strong GPU and memory demand, exemplified by NVIDIA sell-through and Micron margin expansion, is driving the current cycle.

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