The Semiconductor Pullback Makes This ETF a Strong Buy

"The Invesco Semiconductors ETF dropped over 9.5% over the past month and almost 6% on Thursday alone. Despite the turbulence, PSI is still up 86% over the past year."

"The most important macro variable for PSI over the next 12 months is AI infrastructure capital expenditure by hyperscalers. It shows up directly in the revenue lines of PSI's top holdings."

"Nvidia reported data center revenue of $62.31 billion in Q4 FY2026, up 75% year over year and guided for approximately $78 billion in Q1 FY2027 revenue."

"Quarterly capex guidance from Amazon, Microsoft, Google, and Meta translates almost directly into forward order books for PSI's holdings."

Semiconductor stocks have faced significant challenges, including export control uncertainty and market volatility, leading to a decline in the Invesco Semiconductors ETF. Despite this, the underlying companies continue to perform well, with PSI up 86% over the past year. The key driver for future returns is AI infrastructure capital expenditure by major tech companies, which directly impacts revenue for top holdings like Nvidia and Broadcom. Quarterly capex guidance from these companies is crucial for the order books of PSI's holdings.

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