SMH ETF Investors: Watch Hyperscaler Capex Guidance at July Earnings Calls

The VanEck Semiconductor ETF (NYSEARCA:SMH) closed Friday at $599, capping a stretch in which SMH has returned roughly 146% over the past year and tacked on nearly 20% in May alone. SMH is up about 66% year to date, and the rally has been driven less by NVIDIA than most holders assume. Because the fund uses a modified equal-weight construction, its top seven names each sit between roughly 8% and 10%, which changes what investors should actually be watching.

The current line-up reflects this. Advanced Micro Devices (NASDAQ:AMD | AMD Price Prediction) leads at about 10%, followed by Broadcom (NASDAQ:AVGO) at nearly 10%, Micron Technology (NASDAQ:MU) at about 9%, Taiwan Semiconductor Manufacturing (TSM) at about 9%, and NVIDIA (NVDA) at only 8.4%.

The expense ratio is 0.35%.

The macro factor: hyperscaler AI capex guidance

Every dollar of incremental hyperscaler spending flows through SMH’s top holdings. NVIDIA’s Q1 FY27 Data Center revenue reached $75.2 billion, up 92% year over year, with Data Center Networking alone up 199%. Broadcom’s most recent AI semiconductor revenue ran $8.4 billion, up 106% year over year, with CEO Hock Tan targeting more than $100 billion in AI sales by 2027. NVIDIA has already locked in $119 billion of supply commitments, money that only pays off if Microsoft, Meta, Alphabet, and Amazon keep raising the capex bar.

What to watch: hyperscaler quarterly capex guidance at the July and October earnings calls. Any walk-back hits SMH harder than rates or inflation ever would. Cross-check against the SIA monthly billings report and TSMC’s monthly revenue release on the 10th of each month, both of which show order flow in close to real time. The reference period is 2022, when the SOX fell roughly a third as cloud capex paused; the symmetric upside is what SMH holders have been collecting since.

The fund-specific factor: memory pricing and the June 3 Broadcom report

Because SMH is not cap-weighted, Micron’s 905% one-year move matters more than investors realize. Micron’s fiscal Q1 Cloud Memory revenue was $5.28 billion at a 66% gross margin, and management guided next-quarter revenue to $18.7 billion at a 68% gross margin, citing HBM order books extending into 2027. With Micron at roughly 9% of SMH, a memory price rollover would clip the fund harder than a single-digit pullback in NVIDIA shares.

The near-term tell is Broadcom’s earnings after the close on June 3. Broadcom guided Q2 revenue to roughly $22 billion, up 47% year over year, with AI semis at $10.7 billion. It is the only top-five SMH holding reporting in June, so the report sets the tone for two months. A reiteration of the $100 billion AI roadmap should let SMH absorb macro noise; a softer custom-ASIC outlook would force a re-rating across the fund’s design and equipment names. Intel, up about 211% year to date on the back of the $5 billion NVIDIA equity investment and Intel 18A ramp, is the wild card if the foundry story finally converts.

The bottom line for the next 12 months

Anchor the macro call to hyperscaler capex commentary from Microsoft, Meta, Alphabet, and Amazon in July and October; a downward revision would hit SMH first and hardest. On the fund-specific side, treat Broadcom’s June 3 report as the immediate signal and Micron’s August fiscal Q4 as the confirmation that the memory supercycle, now a near-tenth of SMH, is still intact.