Investors who have been following the semiconductor sector are well aware of its bullish potential. With advancements in technology sub-sectors such as high-speed networking, data centers, 5G, EVs, and clean-tech, the demand for semiconductors has skyrocketed. One excellent way to gain exposure to this dynamic and important sector is through the VanEck Semiconductor ETF (SMH), which holds a significant stake in Nvidia (NVDA) and stands to benefit from the growing field of AI.
Semiconductors have become an integral part of our modern lives. They are found in smartphones, TVs, laptops, wireless routers, and even cars. Some of the most valuable semiconductors are manufactured by Nvidia, and the demand for their products is so high that restrictions have been placed on selling their top-end AI processors to China. However, Nvidia remains optimistic about meeting this demand and expects strong global demand for their chips.
The SMH ETF has consistently outperformed the broader market averages, including the S&P500, DJIA, and Nasdaq-100 ETFs. Sales for the global semiconductor market are projected to triple over the next decade, making it an essential sector for investors.
In recent news, the Semiconductor Industry Association reported a 5.3% year-over-year increase in chip sales for November 2023, signaling a positive trend in the global chip market. Looking ahead, double-digit growth is projected for the global semiconductor market in 2024.
The top holdings in the SMH ETF include Nvidia, Taiwan Semiconductor Corp (TSM), and Broadcom (AVGO). Nvidia’s data-center revenue has been booming, leading to increased free-cash-flow. TSMC, the leading semiconductor manufacturer, offers an attractive valuation compared to the S&P500. Broadcom is a key player in the high-speed networking market and has shown significant growth through both organic growth and acquisitions.
With the explosive growth and increasing demand for semiconductors, investors should consider establishing a core position in this sector. The SMH ETF provides a diversified approach to investing in semiconductors, allowing investors to take advantage of market volatility. Whether investing in individual semiconductor companies or a diversified ETF like SMH, the semiconductor sector is poised for continued growth and offers exciting opportunities for investors.
The source of the article is from the blog guambia.com.uy