Five Semiconductor Investments to Profit from AI

01/24/2025

Five semiconductor investments to profit from AI include two industry exchange-traded funds (ETFs) and three successful stocks with further room to grow.
The five semiconductor investments to profit from AI, also known as artificial intelligence, give those seeking to ride the rising tide of opportunity enticing routes to take. The two funds focus on the biggest stocks in the semiconductor sphere.
Among $406 billion in data center system spending, semiconductors currently comprise $144 billion, per Gartner. That semiconductor data center spending total is expected to rise to $179 billion by calendar year 2028, based on projected growth of 12.5% compound annual growth rate (CAGR).
Five Semiconductor Investments to Profit from AI: SMH
Investors who want exposure to the biggest semiconductor stocks that are benefitting greatly from developments in artificial intelligence may want to buy VanEck Semiconductor (NASDAQ: SMH). That view is offered by Bob Carlson, who heads the Retirement Watch investment newsletter. Carlson, who also developed his proprietary IRA Conversion Calculator to help investors assess whether they should incur taxes on IRA money now or wait until later when their income may fall.
There is no question that enthusiasm is high for AI and the key role of semiconductor companies that produce revenue from the use of computer chips, Carlson said. Both businesses and investors have been profiting from the growth of AI applications, Carlson continued.
“Businesses are investing more in AI,” Carlson said. “That boosts the revenues and earnings of semiconductor companies with AI-related products.
“Many of the stocks now are highly valued. Their stock prices depend on a continuation of recent trends. Disappointments in AI development or decisions by businesses to slow their investments in AI projects would likely cause semiconductor stocks to tumble."
The fund tracks a unique index, the MVIS US Listed Semiconductor 25. As the name implies, the fund usually owns 25 stocks, Carlson said. It is capitalization-weighted and is concentrated in the largest companies in the sector, with 72% of the fund in the 10 largest positions.
Bob Carlson, editor of Retirement Watch, meets with Paul Dykewicz.
The largest holdings recently were NVIDIA, Taiwan Semiconductor Manufacturing Company, Broadcom, ASML Holdings, and Applied Materials. About 80% of the stocks were of U.S.-based companies.
The concentration in a few large companies makes the fund’s returns very volatile. In any given period, it is likely to be ranked in either the top quartile or lowest quartile of technology ETFs.
The fund’s shareholders benefitted greatly the last two years from the large allocations to NVDA and TSMC. The dividend yield recently was 1.01%.
SMH gained 10.32% so far in 2025 and 42.68% over the last 12 months.

Chart courtesy of www.StockCharts.com.

Five Semiconductor Investments to Profit from AI: SOXQ
In addition, investors who want to invest in the traditional Philadelphia stock exchange semiconductor index, the SOX, can buy Invesco PHLX Semiconductor (SOXQ), Carlson counseled. There are no surprises, since the index is well-established. The index consists of the 30 largest semiconductor companies listed in the United States, he added.
The index is weighted using a modified capitalization method. Recently, 61% of the fund was in the 10 largest positions.
Top holdings recently were Broadcom, NVIDIA, Advanced Micro Devices, Marvel Technology, and Taiwan Semiconductor Manufacturing Company. SOXQ gained 9.79% so far in 2025 and 25.58% over the last 12 months. The dividend yield recently was 1.04%, Carlson said.
Chart courtesy of www.StockCharts.com.
Five Semiconductor Investments to Profit from AI: AVGO
Three following three semiconductor stocks to buy feature a trio of industry leaders. Each of the three semiconductor stocks to buy is a current recommendation of BofA Global Research. The stocks offer investors a chance for outsized growth as technology trends continue to provide powerful profitability potential.
One of the three is Irving, California-based Broadcom Inc. (NASDAQ: AVGO), a semiconductor company that makes products for wireless and broadband communications companies. Broadcom is rated a buy and has received a $250 price objective from BofA Global Research.
Chart courtesy of www.StockCharts.com.

Five Semiconductor Investments to Profit from AI: Broadcom
With a calendar 32x 2026 price/earnings (P/E) estimate, Broadcom ranks at the upper end of its 7x-35x historical range. However, BofA concluded the valuation is justified due to Broadcom’s double-digit-percentage earnings per share (EPS) growth and strong position as a profitability leader in the semiconductor industry. The company also is a potent provider of free cash flow (FCF).
Risks to Broadcom attaining the price objective estimated for it by BofA are: 1) semiconductor cycle unpredictability, including sensitivity to fundamental or sentiment shifts in artificial intelligence (AI), 2) high exposure to Apple and Google with potential design out risks, and 3) competitive risks in networking, smartphone, storage, enterprise software markets, including rising NVDA competition in networking.
In addition, Broadcom has been a frequent acquirer of assets, which increases financial and integration risks. Plus, Broadcom has a large $60 billion in net debt.
Five Semiconductor Investments to Profit from AI: Marvell
A second semiconductor stock that BofA rates as a buy is Santa Clara, California-based Marvell Technology, Inc. (NASDAQ: MRVL), a provider of data infrastructure semiconductor solutions. Marvell Technology is another buy recommendation of BofA, which put a $150 price target on the stock.
BofA projects 40%-50%-plus compounded annual earnings per share (EPS) growth potential for Marvell Technology during the next several years within a normal 1x-2x range for high growth semi peers.
Marvell Technology also is a current recommendation of technology futurist George Gilder in his Gilder’s Technology Report investment newsletter.
Risks to Marvell Technology include integration challenges from recent deals, its pile of net debt and the need to attain expected cost synergies in a timely manner. Other potential pitfalls are cyclical industry challenges such as a possible slowdown in legacy hard disk drive, infrastructure spending and storage assets, as well as competition with larger and better resourced rivals, BofA continued.
Chart courtesy of www.StockCharts.com.
George Gilder, head of Gilder’s Technology Report, meets with Paul Dykewicz.
Five Semiconductor Investments to Profit from AI: NVIDIA
Santa Clara, California-based NVIDIA Corporation (NASDAQ: NVDA) is a third semiconductor stock that BofA rates as a buy. BofA set a $190 price objective on Nvidia, based on a 33x 2026 estimated price/earnings (P/E) multiple, excluding cash. The multiple is within NVDA's historical 21x-67x forward year P/E range, which BofA wrote is justified due to its stronger growth opportunities ahead as gaming cycle troughs and data center demand potentially faces strong, long-term demand challenges, BofA wrote.
Not only is Nvidia a recommendation in Gilder’s Technology Report, but also in the High Velocity Options advisory service of Jim Woods and the Hi-Tech Trader service of Bryan Perry.
Risks to Nvidia achieving BofA’s lofty projections include possible weakness in consumer-driven gaming market, competition with major public companies, internal cloud projects and private companies in AI and accelerated computing markets. Further risk exists from larger-than-expected impact of restrictions on compute shipments to China, or additional restrictions placed on activity in the region.
Other uncertainty could come from lumpy and unpredictable sales in new enterprise, data center and autos markets, as well as potential for decelerating capital returns and enhanced government scrutiny of NVDA's dominant market position in AI chips, BofA wrote.
Chart courtesy of www.StockCharts.com.
Five Semiconductor Investments to Profit from AI: Summary
The five semiconductor investments to profit from AI could produce potent portfolio progress. Investors seeking to score strong profits from semiconductors seem to have significant potential ahead.
With technology advances occurring throughout the economy, putting some money to work among semiconductor stocks and ETFs appears to be an astute strategy. From space missions and satellites above the earth to applications on the ground, semiconductors are a source of support for technical advances of many kinds.
Paul Dykewicz is the editor of StockInvestor.com and the editorial director of Eagle Financial Publications in Washington, D.C. He writes and edits for the website, as well as edits investment newsletters, time-sensitive trading alerts and other reports published by Eagle. He also is an accomplished, award-winning journalist who has written for Dow Jones, USA Today and other publications, as well as served as business editor of a daily newspaper in Baltimore. In addition, Paul is the author of the inspirational book, "Holy Smokes! Golden Guidance from Notre Dame's Championship Chaplain." He received his MBA in finance from Johns Hopkins University, where he was a two-time president of the school's Finance Club. In addition, Paul has a bachelor's degree from the University of Michigan and a master's degree in journalism from Michigan State University. Outside of work, Paul volunteers with a faith-based organization to assist the poor in Southeast Washington, D.C., to learn personal finance skills to lift themselves out of debt.

Sincerely,
Paul Dykewicz, Editor
DividendInvestor.com