2024-02-19 10:39:14 ET
Summary
- Semiconductor stocks, including Nvidia, have benefited from the AI boom and have seen outsized gains.
- The VanEck Semiconductor ETF is recommended for its strong tailwinds, but it is currently overbought.
- SMH has a concentrated allocation towards Nvidia and has outperformed its peers, but its performance is cyclical.
Investment thesis
Semiconductor stocks have been arguably one of the biggest beneficiaries in the age of AI and the subsequent bull market that followed last year. Nvidia ( NVDA ) led from the front with its H100 GPUs, which are in extreme demand since ML researchers increasingly use the company’s GPUs to train and deploy AI models. In the last year, many technology companies raced against one another to order Nvidia’s GPUs, while others such as AMD ( AMD ) and Intel ( INTC ) also took advantage of demand to launch their own AI-focused compute semiconductor products. The craze for churning out better front-end semiconductor products also spread out more horizontally into the broader space, with semiconductor equipment companies also seeing demand for their infrastructure products. This led to outsized gains in semiconductor stocks and related ETFs, with the VanEck Semiconductor ETF ( SMH ) being an example....
Read the full article on Seeking Alpha
For further details see:
SMH: Nvidia's Earnings Is Key, But Long-Term Tailwinds Remain Intact