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%.
The fund is doing what a semiconductor ETF is supposed to do during a capex boom, and SOXQ has done it while charging less than the alternatives.
The fund and the problem it solves
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 (NASDAQ:NVDA | NVDA Price Prediction), Broadcom (NASDAQ:AVGO), and Micron (NASDAQ:MU).
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 (NASDAQ: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.
Does it deliver
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 ratio, and over a decade that fee differential compounds into real money. SOXQ delivers nearly the same exposure at roughly half the cost.
Differentiation is thin. SOXQ and SOXX sit on the same handful of names. NVIDIA alone carries a $5.45 trillion market cap and an analyst target near $273, so any cap-weighted semis fund is in large part a NVIDIA fund with side dishes.
The PHLX index that SOXQ tracks is modified-cap weighted, which caps the giants slightly, and that nudge has not been enough to change the story this year. Anyone hoping SOXQ would offer a structurally different bet on chips will find it does not.
The tradeoffs
Three constraints matter for anyone sizing this position.
- Concentration. Top ten holdings at 61% means a single bad quarter from NVIDIA or a guide cut from ASML moves the entire fund.
- Geopolitics. NVIDIA’s Q1 FY2027 guide of about $78 billion excludes China data center compute entirely. ASML faces Dutch curbs on its NXT:2050i and NXT:2100i tools, and AMD has MI308 restrictions. The export-control regime functions as a recurring tax on this basket.
- Valuation after the run. Even though chips stocks are still quite cheap relative to their growth, they are starting to get expensive once more. This could mean another bout of sideways trading for a few months or a correction.
Who SOXQ fits
SOXQ makes sense as a 5% to 10% AI sleeve for an investor who has decided hyperscaler capex will keep landing on chips and equipment for several more years, and who wants the cheapest reasonable wrapper around that thesis.
If you already own NVIDIA, AMD, and Broadcom directly in size, SOXQ is largely a duplicate position. For investors who want AI exposure without the chip cyclicality, a broad technology fund is the better vehicle.
The case for SOXQ is straightforward picks-and-shovels exposure to companies whose customers are still raising capex guidance into 2026, priced at 0.19%, and it earns its slot in a growth-tilted portfolio on those terms.
Top Gaining Stocks
Top Losing Stocks