Billions Just Hit The Biggest Semiconductor ETF: Are Investors Going All In On AI Chip Boom?

The semiconductor industry is reaching unprecedented levels of popularity among investors as it becomes clear that chips have become some of the most important commodities of present times.

On Thursday, major cash inflows to the world’s largest semiconductor ETF shows substantial disbelief in the idea that a tech bubble might burst any time soon.

Semiconductors are not only consequential within the supply chain for consumer electronics: they serve as the engine behind industrial growth, military supremacy and might ultimately become the backbone of the geopolitical success for nations like China and the U.S.

According to shared by Eric Balchunas, senior ETF analyst forBloomberg, the VanEck Semiconductor ETF (NASDAQ:SMH) had record cash inflows on Thursday, possibly triggered by automated buying signals.

The ETF, which is pegged to the MVIS US Listed Semiconductor 25 Index and follows the performance of the 25 largest and most liquid U.S.-listed companies in the industry, received an injection of $1.6 billion, doubling its previous all-time high for weekly fund flows.

The event can be read as another vote of trust towards the up-and-coming industry. Shares of the VanEck Semiconductor ETF peaked last week. The fund added almost 80% in gains in the last year and 30% in 2024 alone.

Other ETFs following the industry show a similar trajectory. iShares Semiconductor ETF (NASDAQ:SOXX), the second-largest semiconductor ETF after VanEck by total assets, grew 58% in the past year and 19% since January.

Direxion Daily Semiconductor Bull 3X Shares (NYSE:SOXL), ranking third in total assets among its peers, stands out as the top performer. As a leveraged ETF aiming to amplify the industry’s growth threefold, the fund has surged by 183% over the past year, with a notable 53% increase since the beginning of January alone.

While the industry saw a slight downtick this week, ETFs following the sector have benefited significantly from the recent tech rally, which counted semiconductor stocks among some of its biggest winners.