Deciding whether to plunge into the stock universe involves navigating a labyrinth of choices, a plethora of opportunities, and oftentimes, the looming presence of risk. Blackrock, a financial giant with a staggering $10 trillion in client funds under its steady watch, offers a beacon of hope through iShares, its ETF arm housing over 1,400 investment options for enthusiastic investors.

The iShares Semiconductor ETF (NASDAQ: SOXX) stands tall in the vast, ever-evolving landscape of exchange-traded funds. With a robust $12.9 billion portfolio brimming with chip stocks at the forefront of the artificial intelligence revolution, this ETF has recently embarked on a notable journey through a stock split.

Image source: Getty Images.

Navigating the Stock Split Seas

Over the past decade, the iShares Semiconductor ETF has flaunted a remarkable 25.3% compound annual return, leaving the S&P 500 index trailing in its wake with a mere 13.1% annual return. As the ETF reached a peak of $680 per share in March, it sail into choppy waters for many retail investors. Sensing the need to make this voyage more inclusive, iShares orchestrated a 3-for-1 stock split. This move swelled the number of shares available by threefold, thus halving the price per share to approximately $225 at current valuations.

Armed with newfound accessibility, the ETF is now better poised to capture a wider investor base, riding the surging waves of opportunity in the AI realm. With leading holdings like Nvidia and Advanced Micro Devices steering the ship, there’s a high chance of charting a course towards impressive returns moving forward.

Sailing with Top Chip Manufacturers

In the dynamic world of artificial intelligence, enchanting creations like ChatGPT, Gemini, and Claude mesmerize users with their prowess to interpret and create text, images, videos, and code. Yet, beneath the veil of these AI marvels lie hives of data centers housing cutting-edge chips. Enter Nvidia, the purveyor of the industry’s most potent graphics processing units (GPUs), tailored for the very purpose of fueling AI development and deployment. With the company now commanding a colossal $2.3 trillion valuation, a staggering $1.5 trillion of which was minted in the last year alone, Nvidia finds itself basking in the glow of soaring demand for its revolutionary GPUs from tech titans like Microsoft, Amazon, and Meta Platforms.

While the iShares Semiconductor ETF boasts a diverse portfolio of 30 stocks, Nvidia shines as its crowning jewel. The ETF places significant weight on its top five holdings, collectively representing 36.4% of its portfolio value.

Stock	iShares Semiconductor ETF Weighting
1. Nvidia	8.78%
2. Broadcom	7.84%
3. Advanced Micro Devices	7.21%
4. Qualcomm	6.44%
5. Intel	6.16%

Data source: iShares. Portfolio weightings as of March 28, 2024.

Broadcom, a stalwart in networking and server connectivity solutions for high-performance computing, stands as a beacon of innovation with its Tomahawk 5 data center switch, crafted to accelerate AI and machine learning workloads. Meanwhile, AMD emerges as Nvidia’s formidable rival, boasting the title with its cutting-edge data center GPUs under the MI300 series, in addition to its trailblazing chips for AI-driven personal computing.

While the ETF’s largest holdings command attention, key players like Micron Technology, a leading producer of memory and storage chips, alongside Taiwan Semiconductor Manufacturing, the unrivaled third-party foundry for advanced chip production, contribute invaluable cogs to the semiconductor ecosystem’s machinery.

Aiming for Long-Term Rewards

Since its inception in 2001, the iShares Semiconductor ETF has delivered promising returns, clocking in at a respectable compound annual rate of 11.6%. However, the burgeoning territories of cloud computing and AI have catapulted this ETF to greater heights, boasting a stellar 25.3% average annual gain over the past decade.

The table below paints a vivid picture of the potential rewards awaiting an investor who sets sail with $500 each month into the ETF, embarking on a voyage of 10, 20, or even 30 years, underlining the various scenarios that may unfold.

• Betting on iShares Semiconductor ETF’s rising trajectory, backed by a squad of industry pioneers, might just be the ultimate investing voyage for intrepid souls seeking growth and glory in the realm of artificial intelligence.