How the Ives Index Redefines Capital Allocation in the AI Semiconductor Era

The AI revolution is no longer a speculative future—it is today's most transformative economic force. At the heart of this shift lies a seismic reallocation of capital toward semiconductor technologies, where companies like Nvidia, Broadcom, and TSMC are redefining the rules of value creation. The Dan Ives Wedbush AI Revolution ETF (IVES), tracking the Ives AI 30 index, has emerged as a barometer of this transition. By analyzing the fund's structure and performance, we uncover why investors should prioritize AI-driven semiconductor stocks in their portfolios.

The Ives Index: A Dynamic Barometer of AI Infrastructure Demand

The Ives AI 30 index is a living entity, reconfigured quarterly and adjusted in real-time to reflect the fast-paced evolution of AI. Unlike static indices, it prioritizes companies that are not just “AI adjacent” but integral to the infrastructure enabling machine learning, generative AI, and cloud computing. The index's top holdings—Microsoft, Nvidia, Oracle, Broadcom, and TSMC—collectively account for 25% of its weighting, underscoring the centrality of semiconductor and cloud infrastructure firms.

This focus is no coincidence. Semiconductors are the lifeblood of AI. High-bandwidth memory (HBM), GPUs, and custom processing units (XPUs) are in relentless demand as enterprises and governments deploy AI at scale. The global semiconductor market is projected to grow from $697 billion in 2025 to $1 trillion by 2030, driven by AI's insatiable need for computational power. The Ives Index captures this trend by allocating 40% of its capital to semiconductor leaders, including both fabless innovators (e.g., Nvidia) and manufacturing titans (e.g., TSMC).

Capital Allocation Trends: From Commodity to Strategic Asset

The Ives Index's strategic tilt toward semiconductors reflects a broader shift in capital allocation. Historically, semiconductor firms were seen as cyclical plays, sensitive to tech sector swings. Today, they are foundational to AI infrastructure, with capital expenditures (capex) in the sector surging to $185 billion in 2025. This investment is not just for production capacity but for R&D in advanced packaging, AI-driven manufacturing, and energy-efficient designs—areas where the Ives Index's holdings are heavily positioned.

The fund's methodology reinforces this focus. With a modified float-adjusted market cap weighting and a 4% cap on individual holdings, it balances high-conviction exposure to leaders like Nvidia with diversification into smaller, innovative firms such as SoundHound AI and C3.ai. Quarterly rebalancing ensures the portfolio adapts to technological breakthroughs, regulatory shifts, and market leadership changes, making it a resilient vehicle for long-term capital growth.

Why This Matters for Investors

The Ives Index's success—$343.8 million in assets under management within a month of its June 2025 launch—highlights investor recognition of AI infrastructure's strategic value. The ETF's 3.4% return since inception outperformed the Nasdaq-100's 1% gain, a testament to the sector's momentum. For investors, this underscores three key insights:
1. Semiconductors as Core Infrastructure: AI's growth is not speculative; it is a $2 trillion enterprise and government spending cycle. Semiconductor firms are the gatekeepers of this expansion.
2. Active Research, Passive Structure: The Ives Index leverages Dan Ives' proprietary research to curate a “living” portfolio, combining the transparency of passive investing with the agility of active management.
3. Risk Mitigation Through Diversification: By balancing exposure between established leaders and emerging innovators, the ETF reduces reliance on any single stock while maintaining alignment with AI's evolving needs.

The Road Ahead

The semiconductor industry's challenges—supply chain bottlenecks, rising R&D costs, and geopolitical tensions—remain. Yet, the Ives Index's focus on AI infrastructure positions it to capitalize on secular trends. Companies within the fund are investing in AI-driven digital twins, advanced materials, and energy-efficient manufacturing, all of which will be critical to sustaining the sector's growth.

For investors, the Ives Index offers a compelling thesis: a 0.75% expense ratio, outperformance against broader tech indices, and a portfolio structured to ride the AI wave. As AI adoption accelerates, the index's emphasis on semiconductor and cloud infrastructure will likely continue to outperform, making it a cornerstone of a forward-looking portfolio.

In conclusion, the Ives Index is more than an ETF—it is a roadmap for capital allocation in the AI era. By anchoring investments in the semiconductor firms that power the AI revolution, investors can position themselves at the intersection of innovation and economic transformation.