A share of the SPDR S&P Semiconductor ETF (NYSEARCA:XSD) closed at $226.42 on May 29, 2025. One year later, on May 29, 2026, it closed at $613.05, a 171% gain on a fund that markets itself, accurately, as a boring equal-weight basket of US chip stocks. If you put $10,000 into XSD the morning after Memorial Day weekend in 2025 and did absolutely nothing, you were sitting on something close to $27,000 by Memorial Day weekend 2026. The headline is real. The reason it happened is more interesting than the chart.
The arithmetic, in plain dollars
XSD started 2026 at $321.42 and ran to $613.05 by May 29, a 91% year-to-date move in five months. The one-month picture is even more compressed. The fund opened April 29 at $465.20 and finished May 29 at $613.05, a 32% gain in 30 days. Stretch the window further back and the picture gets even more lopsided. Over five years XSD is up 248%, and over ten years it is up 1,315.2% from a May 31, 2016 price of $43.32. Because XSD pays only a 0.65% dividend yield, the price return and the total return are within rounding distance of each other. The chart and the brokerage statement tell the same story.
One asterisk worth naming. Friday May 29 was itself a 3% down day for XSD, from $630.58 to $613.05, so anyone screenshotting Thursday’s close had an even better number. The trend is up. The path is not a straight line.
What actually did the work
XSD tracks the S&P Semiconductor Select Industry Index on a modified equal-weight basis, which is why the top holding, Marvell Technology at 3.06%, sits a fraction of a percent ahead of Power Integrations at 3.05%, Cirrus Logic at 2.98%, and On Semiconductor at 2.91%. The fund holds 44 names and rebalances them back toward parity. That structural choice is the entire story of why XSD has run the way it has.
In a cap-weighted semiconductor fund, NVIDIA’s gravitational pull does most of the lifting and most of the dragging. In an equal-weight fund, a broad sector tailwind hits every name at roughly the same dose, and the small and mid-cap names, which are far more torquey than the trillion-dollar incumbents, dominate the returns. That is exactly what 2025 and early 2026 served up. According to the Taiwan Semiconductor Industry Association, worldwide semiconductor revenue reached US$298.5 billion in Q1 2026, a 25.0% increase from Q4 2025 and a 79.2% increase year over year. US semiconductor sales alone hit $101.4 billion in Q1 2026, up 83.1% year over year. The global market reached $796 billion in 2025, driven by data centers, AI systems, and advanced logic and memory.
That demand wave landed on every shelf of the chip supply chain, and the equal-weight structure picked up all of it. Marvell Technology (NASDAQ:MRVL | MRVL Price Prediction), the top holding, is up 223% over the past year, from $63.56 to $205. Its 142% year-to-date move alone outruns the entire fund. But because Marvell is capped near 3% of XSD, it cannot single-handedly account for what happened. The fund worked because forty-something names in the basket did some version of the same thing at the same time.
Add the volatility backdrop. The VIX sat at 15.74 on May 28, 2026, in the lower 19th percentile of its 12-month range. After spiking to 31.05 on March 27, 2026 during a stress event, the fear gauge has normalized in a steady drift lower. Semiconductors are a high-beta sector. A calm tape after a fear spike is exactly the environment in which they run, and they ran.
What you would need to see for this to keep working
The honest read on a one-year 170% gain in a sector ETF is that the easy money is no longer easy. The fund’s price-to-earnings ratio sits at 23 on estimated EPS growth of 26.5%, which is not heroic by sector standards and not cheap by historical ones. The setup that worked, broad semi demand plus a calm tape plus an equal-weight tilt toward small and mid-caps, is still intact at materially higher prices. That changes the expected outcome even if the direction stays the same.
Three things are worth keeping an eye on going forward. The first is the global semiconductor revenue report from WSTS. The Q1 2026 number of $298.5 billion, up 79.2% year over year, is the kind of growth rate that mathematically cannot persist. When the year-over-year comparison normalizes, the sector multiple has to do more of the work, and at 22 times earnings the room to expand is narrower than it was at 14 times. The second is the VIX. At 15.74, sentiment is constructive. Any sustained move back above 20 historically coincides with semiconductor drawdowns disproportionate to the broad market, and XSD’s equal-weight tilt toward smaller names cuts both ways when volatility returns. The third is the regulatory wildcard. The EU’s chips act 2.0, set for publication on 27 May 2026 as part of the ‘tech sovereignty package’, signals that semiconductor policy is now industrial policy across every major economy. That is supportive of the sector long term and a source of episodic noise short term.
Mike Zaccardi at Seeking Alpha called XSD a buy in a December 25, 2025 piece citing the modified equal-weight structure, US small and mid-cap focus, and seasonal tailwinds. The XSD ticker sentiment score on that article was 0.53, bullish. He was right. The harder question, the one a thoughtful friend would ask out loud, is whether the same call from $613 carries the same weight as the call from a price that has since roughly doubled.
What XSD delivered in the past year is what an equal-weight sector fund is supposed to do when its sector is the trade of the year. The mechanism is real, the math is clean, and the 0.35% expense ratio did not get in the way. The mechanism is also still running, which is why the next 12 months are a different bet than the last 12 were. Watch the WSTS quarterly revenue reports, watch the VIX, and watch whether the small and mid-cap chip names in the basket can keep growing into the multiple they now carry. That is the entire forward look.
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