According to VanEck’s CEO, investing in semiconductors may be the most efficient way to capitalize on the artificial intelligence boom.
“Semiconductors have become the heart of the AI industry,” Jan van Eck told CNBC’s “ETF Edge” this week.
His company’s VanEck Semiconductor ETF (SMH), which includes the country’s 25 largest chipmakers, is up 21% this year since Wednesday’s close. However, SMH has fallen almost 6% this month, leading to a decline Intel, AMD And On semiconductors.
The fund’s top position, Nvidiahas seen its shares rise nearly 70% this year as demand for its AI processors soared, but has also fallen 7% since the start of the month.
Van Eck suspects the weakness is temporary. He claims that high interest in AI chips could bring more sustainable returns to the group.
“They have upgraded from a highly cyclical business with short product lifespans to being part of the growth business and have more recurring revenue, so they can continue to generate strong profits despite some short-term things,” van Eck said.
Mike Akins, founding partner of ETF Action, also sees opportunities for investors. He believes that limited competition for the products of some of the leading chip manufacturers could support the group.
“They have a high moat, and they control that price point,” he said in the same interview. “Unless there is a situation where competition in this area increases significantly and there may be some price pressure, it is difficult to imagine an end to this trade.”
Still, Akins advises investors to pay attention to semiconductor fund flows as a barometer of future performance.
“We often warn our clients not to look at flows almost as a contrarian indicator. If flows are really falling, that is potentially a buying opportunity, and vice versa. If the flows are really increasing, it might be time to let up a little.”
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2024-04-18 16:50:12
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