AI & Semiconductors

Aggressive Sector Overweight

A concentrated bet on the AI infrastructure buildout. Semis are the picks-and-shovels of the AI revolution. High conviction, high volatility — this is not for the faint of heart.

4
ETFs
0.4%
Aggregate Yield
$141.9B
Wtd Avg AUM

Holdings

Symbol Name Weight Price 1D 3M YTD Yield AUM
SMH VanEck Semiconductor ETF 35% $436.88 ... ... ... 0.3% $47.6B
QQQ Invesco QQQ Trust, Series 1 30% $610.96 ... ... ... 0.5% $396.3B
SOXX iShares Semiconductor ETF 20% $386.21 ... ... ... 0.4% $24.3B
IGV iShares Expanded Tech-Software Sector ETF 15% $74.61 ... ... ... — $9.8B

Investment Thesis

Every AI model needs chips to train and run inference. NVIDIA alone has seen revenues explode from $27B to over $100B in two years, and the broader semiconductor industry is entering a supercycle driven by data center buildouts, edge AI, and the automotive transition. SMH captures the leaders — NVIDIA, TSMC, Broadcom, ASML — while SOXX provides broader diversification across the semiconductor value chain. QQQ adds the tech companies actually deploying AI (Microsoft, Google, Amazon, Meta), and IGV captures the software layer that will monetize AI through SaaS products. The risk is significant: semiconductor stocks are cyclical, and if AI spending disappoints or the cycle peaks, these stocks could fall 40-50%. But the structural demand thesis — that computing power needs will grow exponentially for decades — is compelling.

Portfolio Construction

SMH VanEck Semiconductor ETF
35%
Semiconductor leaders — top-heavy in NVIDIA, TSMC, Broadcom, and ASML. These are the companies building the physical infrastructure of AI, with massive competitive moats in chip design and fabrication.
Yield: 0.3% AUM: $47.6B
QQQ Invesco QQQ Trust, Series 1
30%
Broad tech exposure including AI beneficiaries — Microsoft (Azure AI), Google (Gemini), Amazon (AWS), and Meta (Llama). These hyperscalers are both the biggest AI spenders and the companies most likely to monetize it.
Yield: 0.5% AUM: $396.3B
SOXX iShares Semiconductor ETF
20%
Broader semiconductor index for diversification — includes mid-cap chip companies in analog, memory, and equipment that SMH underweights. Captures the full semiconductor value chain.
Yield: 0.4% AUM: $24.3B
IGV iShares Expanded Tech-Software Sector ETF
15%
Software companies monetizing AI — enterprise software, cybersecurity, and cloud platforms that will integrate AI features and charge premium pricing. The application layer of the AI stack.
AUM: $9.8B

Key Considerations

  • Extremely concentrated in one theme — if AI investment slows, losses will be severe
  • Semiconductor stocks are cyclical and can drop 40%+ in downturns
  • Significant overlap between SMH, SOXX, and QQQ in top holdings like NVIDIA
  • Valuations are stretched after the 2023-2025 AI rally
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