Your Portfolio Isn't Invested in the Right Kind of AI Unless You Hold This ETF

SOXQ tracks the PHLX Semiconductor Sector Index and targets the picks-and-shovels layer of artificial intelligence by investing in chip designers and the companies whose tools make advanced chips physically possible. The fund avoids software vendors and infrastructure resellers that dominate many AI-themed ETFs, focusing instead on beneficiaries of hyperscaler spending where cash flows and capacity constraints are expected to persist. Launched in June 2021, it charges 0.19% and reached over $1 billion in assets. Top holdings include NVIDIA, Broadcom, and Micron. The article cites strong demand indicators such as NVIDIA revenue growth and ASML’s large EUV backlog. Performance is compared with SOXX, showing similar trailing returns with lower fees.

"Hyperscaler AI budgets have to land somewhere. They land at the chip designers and at the one company whose tools make advanced chips physically possible. That is the entire thesis behind Invesco PHLX Semiconductor ETF ( NASDAQ:SOXQ), which tracks the PHLX Semiconductor Sector Index and gives you concentrated exposure to the picks-and-shovels layer of artificial intelligence. SOXQ trades around $86 and has returned 49% year-to-date, with a one-year gain of 125%."

"SOXQ sidesteps the software-vendor and infrastructure-reseller names that dominate many AI-themed ETFs. SOXQ holds the beneficiaries of that spending, which is where the cash is actually flowing and where hyperscalers grappling with a compute shortage are expected to keep writing checks for years. The fund launched in June 2021, charges 0.19%, and crossed $1 billion in assets earlier this year. Its top ten positions sit at 61% of the portfolio, anchored by NVIDIA, Broadcom, and Micron."

"All these companies sell physical things (GPUs, custom accelerators, lithography systems) into a market where customers are queuing up for capacity. NVIDIA's most recent quarter showed revenue of $68.13 billion, up 73.2% year over year. ASML, the Dutch maker of EUV lithography machines, sat on a backlog near €38.8 billion even last year. Cash is flowing to a short list of suppliers, and SOXQ owns the suppliers."

"The honest test is whether SOXQ beats the obvious alternative. iShares Semiconductor ETF ( NASDAQ:SOXX) charges 0.35%, roughly double SOXQ's fee. Over the trailing year SOXQ returned 124% against SOXX at 128%. Year-to-date SOXX leads 54% to 49%. So you are giving up a few percentage points of recent performance for a meaningfully lower expense ra"

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