To The Moon

🌟🌟🌟In researching which ETF has the best performance in the past 5 years, I found out it is $VanEck Semiconductor ETF(SMH)$ .  SMH has skyrocketed a massive 294% in the past 5 years.  In contrast SPY ETF is up 77% in the past 5 years.

SMH tracks a market cap weighted index of 25 of the largest US listed Semiconductor companies. The Top 10 holdings include $NVIDIA Corp(NVDA)$  $Taiwan Semiconductor Manufacturing(TSM)$  Broadcom, $Advanced Micro Devices(AMD)$  ASML, Lam Research, Applied Materials, $Intel(INTC)$  Qualcomm and Analog Devices.

The Top 10 holdings weightage is 72% of which Nvidia takes up 20.7% weightage and TSMC at 12.6% followed by the rest.  Total number of holdings is 25.

Expense ratio is 0.35%. Distributions are paid annually.  The current distribution yield is 0.51%.

Performance wise SMH is up 2.6% on Friday and just 0.17% in the past 5 days.  However SMH has risen 28.8% year todate and in 2023, it has jumped 75%.

Wall Street Analysts are bullish on SMH with a Buy rating, Target price of USD 245.17, an upside potential of 12% according to Tipranks. 

Nvidia has been a star performer in the semiconductor sector with its share price up a huge 84.3% year todate and 209% in the past 5 years.  Its market capitalisation has reached over USD 2 Trillion within the past year.

Nvidia has established itself as a leader in specialised AI chips with its innovative H100 and most recent launch of Blackwell B200 GPUs.  However as with all technology, new competitors are emerging to challenge Nvidia's supremacy.

AMD is Nvidia's closest competitor and gaining ground with its MI300X GPUs, designed to compete with Nvidia's offerings.

Intel is another heavyweight which is making significant strides with its Gaudi 3 chips, promising superior performance and energy efficiency compared to Nvidia's products.

TSMC is the world's largest foundry that makes the most advanced chips.  It can count Nvidia, AMD and Apple as its customers.

One of the most significant factors influencing the semiconductor industry is the current imbalance between supply and demand.  Nvidia has benefited from this scenario, selling its high performance chips at a premium to enterprise clients desperate to meet the escalating demands for AI capabilities. 

However this supply constraint is prompting major tech companies to develop Semiconductor solutions.   For example Tech Giants like Amazon and Google are not only significant consumers of Nvidia chips, they are also investing heavily in their chip development projects to reduce reliance on external suppliers like Nvidia. 

In addition, geopolitical and economic factors such as trade policies and global economic conditions could all affect Semiconductor chips manufacturing and distributions, affecting prices and availability globally. 

As such Nvidia could face more competitive pressures, making it a solid case for investor diversification. 

SMH provides a diversified portfolio of established leaders as well as a range of other Semiconductor companies to allow me to capitalise on the semiconductor sector growth while at the same time, mitigate the risks associated with the performance of any single stock. 

The AI Chip market is set to become increasingly competitive due to the continuing advancement and shift in the semiconductor industry.  So SMH provides me with the ability to invest in the best Semiconductor stocks while maintaining a diversified approach in this area. 

At the last closing price price of USD 217.73 SMH gives me the maximum bang for my hard earned dollars while waiting for capital growth.   In contrast investing in Nvidia would require a minimum sum of USD 887.83 per share.  

With SMH I do not have to choose which semiconductor stocks to invest as it does the heavy lifting for me. Semiconductor chips are the picks and shovels of AI and investing in SMH provides me with the strength and power of great semiconductor stocks at a value for money entry point. 

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