Vanguard's Top ETF Outshines with 24% Gain; VanEck Semiconductor ETF Doubles with 48% Surge

Vanguard's top ETF, up 24% this year, is outperformed by the VanEck Semiconductor ETF (SMH), which has soared 48% YTD. The latter tracks the MVIS Semiconductor Index, reflecting the surge in semiconductor stocks. This outperformance highlights the growing importance of semiconductors in the tech industry and the lucrative returns such investments can yield.

The tech industry has witnessed a remarkable surge in 2023, with semiconductor stocks leading the charge. This trend is exemplified in the outperformance of the VanEck Semiconductor ETF (SMH) compared to Vanguard's top ETF.

According to VanEck's recent report, SMH has experienced a robust performance in the first quarter of 2024, rising 28.9% compared to the previous quarter [1]. This outperformance is primarily attributed to the strong performance of NVIDIA Corporation ($NVDA), which accounts for 20.55% of SMH's portfolio weight [1].

NVIDIA's impressive growth is a testament to the increasing importance of semiconductors in the tech industry. In Q1 2024, NVIDIA reported earnings per share (EPS) of $5.98, marking a significant increase of 629% from the previous year [2]. The company's total revenue also reached a record high of $26.0 billion, up 262% year-over-year and 18% from the previous quarter [2]. This growth was primarily driven by the Data Center sector, which posted a record revenue of $22.6 billion [2].

Semiconductors are a critical component of technological innovation, driving advancements in fields such as artificial intelligence, autonomous vehicles, and the Internet of Things (IoT) [1]. The sector's continued growth and innovation make it an attractive investment opportunity for investors.

The MVIS Semiconductor Index, which SMH tracks, reflects the broader trend of semiconductor stocks. As of March 29, 2024, SMH's top holdings included NVIDIA Corporation, Taiwan Semiconductor Manufacturing Company Ltd (TSM), Broadcom Inc (AVGO), ASML Holding NV (ASML), Texas Instruments Inc (TXN), Qualcomm Inc (QCOM), Intel Corporation (INTC), Lam Research Corp (LRCX), Micron Technology Inc (MU), Applied Materials Inc (AMAT), Advanced Micro Devices Inc (AMD), Analog Devices Inc (ADI), KLA Corp (KLAC), Synopsys Inc (SNPS), Cadence Design Systems Inc (CDNS), NXP Semiconductors NV (NXPI), Marvell Technology Inc (MRVL), Microchip Technology Inc (MCHP), STMicroelectronics NV (STM), Monolithic Power Systems Inc (MPWR), ON Semiconductor Corp (ON), Skyworks Solutions Inc (SWKS), Teradyne Inc (TER), Qorvo Inc (QRVO), and Universal Display Corp (OLED) [1].

Investors interested in gaining exposure to the semiconductor sector may want to consider the VanEck Semiconductor ETF (SMH) as a potential investment opportunity. With a strong performance track record and a diverse portfolio of top semiconductor stocks, SMH offers investors an attractive way to capitalize on the continued growth and innovation in this critical sector of the tech industry.

References:
[1] VanEck. (2024). Vaneck Semiconductor ETF (SMH) 2024 Holdings and Performance Recap. Retrieved from https://www.vaneck.com/us/en/blogs/thematic-investing/vaneck-semiconductor-etf-smh-2024-holdings-and-performance-recap/
[2] Yahoo Finance. (2024). NVIDIA Corporation Stock Summary. Retrieved from https://finance.yahoo.com/quote/NVDA/profile