SMH: Every chip that runs the future, in one fund.

Key metrics

Fund snapshot

Performance snapshot

Performance figures are rounded, time-sensitive, and based on adjusted market-price history through May 15, 2026. SMH's recent numbers are inflated by a powerful AI/chip bull cycle and should not be treated as normal expected returns.

What it is and why it matters

What SMH actually owns

SMH owns a concentrated basket of U.S.-listed semiconductor companies. The top names are the center of the modern compute stack: Nvidia for AI accelerators, Taiwan Semiconductor Manufacturing for foundry capacity, Broadcom and AMD for chip design, Micron for memory, plus equipment and analog leaders such as Lam Research, Texas Instruments, Qualcomm, and Analog Devices.

This is not a broad technology ETF. It does not own every software platform, internet marketplace, or cloud company. It owns the companies that make, design, or equip the chips those platforms need.

Why the AI infrastructure angle matters

AI is not magic floating in the cloud. It is servers, GPUs, memory, networking, cooling, fabs, lithography, packaging, power, and capital spending. When the world builds larger models and more data centers, semiconductor demand becomes the physical bottleneck. SMH is a way to bet that the bottleneck remains valuable.

The fund's Nvidia position is the key reader number: VanEck reported Nvidia at 17.61% on May 14, 2026, so a practical mental model is roughly 20% of SMH is Nvidia. That is why SMH moves like a chip-conviction fund, not like a normal diversified stock ETF.

The semiconductor cycle

Chips are deeply cyclical. Demand surges, companies over-order, capacity gets built, inventories rise, pricing weakens, and the cycle resets. In 2022, SMH fell about 45% from its January high to its October low. That was not a fund failure; that was the semiconductor cycle showing up in the price.

The lesson is simple: SMH can be a great expression of AI infrastructure conviction, but it is not a smooth ride. If a 40% drawdown would make you sell, the position is too large or the thesis is not yours.

Cost analysis

Expense ratio in context

SMH charges 0.35% per year. On a $10,000 position, that is about $35 annually. On $50,000, it is about $175. That is not ultra-cheap like a plain S&P 500 ETF, but it is reasonable for a focused thematic ETF with high liquidity and a long trading history.

The bigger cost is not the 0.35% fee. The bigger cost is concentration risk: if semiconductors go out of favor, the whole fund can fall together. You are paying for a sharp tool. Use it only where a sharp tool belongs.

Tool: Dare Risk Calculator

Use the Dare Risk Calculator to see what a 5% or 10% SMH position would do to your total portfolio if the semiconductor cycle cuts the fund by 30%, 45%, or more.

SMH vs. the competition

SMH vs. SOXX

SMH and SOXX are the two most obvious semiconductor ETF comparisons. SMH tracks the MVIS US Listed Semiconductor 25 Index and holds roughly 27 stocks. SOXX, the iShares Semiconductor ETF, holds roughly 35 stocks. Both are top-heavy, both are direct chip bets, and both can be dominated by the same handful of winners.

The difference is sharpness. SMH is the more concentrated tool and has often had a larger Nvidia exposure. SOXX is still concentrated, but it spreads the bet across a slightly broader semiconductor basket. If you want the cleaner conviction bet, SMH fits. If you want a little more breadth inside the same theme, compare SOXX.

SMH vs. SOXQ

SOXQ is Invesco's PHLX Semiconductor ETF. Its main appeal is cost: SOXQ charges 0.19% versus SMH's 0.35%. That fee gap matters over time, especially if returns cool down from the AI boom years.

SMH's advantage is scale, liquidity, and mindshare. It is much larger and more heavily traded. SOXQ is the cheaper expression of the same broad semiconductor idea, but SMH is the more established Dare-slot vehicle.

SMH vs. QQQ

QQQ is broad Nasdaq-100 exposure. It owns megacap technology, communication, consumer, and growth companies. SMH is a pure semiconductor bet. That difference matters: Nvidia is roughly 20% of SMH, but closer to roughly 10% of QQQ depending on current market weights.

If you want growth with more diversification, QQQ is the broader tool. If your thesis is specifically that chips remain the toll road for AI infrastructure, SMH is the cleaner expression. Do not confuse the two jobs.

Verify current fund data with each sponsor. Holdings and weights move daily.

Who should own SMH

Investors who should consider it

SMH fits investors who have a real, durable view that AI infrastructure spending will keep benefiting semiconductor leaders. You do not need to know which single chip stock wins, but you do need to believe the semiconductor layer remains a profit pool.

It also fits investors who want their Dare slot tied to real companies with real revenue, margins, and cash flows. Compared with crypto or leveraged ETFs, SMH is still speculative, but the speculation is attached to an operating industry.

Investors who should look elsewhere

If you want broad U.S. stock exposure, own VOO, IVV, SPY, or VTI in Build. If you want technology growth but not pure chip-cycle risk, compare QQQ. If your thesis is simply "AI will be big" but you cannot explain why semiconductors specifically should keep winning, SMH is probably too narrow.

Risks and considerations

Concentration risk is the main risk. SMH holds roughly 27 stocks, and Nvidia alone is around 18% to 20%. That is the point of the product, but it means one company and one industry can drive a large part of your outcome.

Semiconductor cyclicality is real. The industry has boom-and-bust dynamics around demand, inventories, capacity, and capital spending. In 2022, SMH suffered an approximate 45% peak-to-trough drawdown. Expect future cycles.

Valuation risk can overwhelm the story. AI infrastructure can be a correct long-term theme and still be overpriced at a given moment. Great companies can deliver poor returns if expectations get too high.

Geopolitical and supply-chain risk matter. Semiconductor production depends on global supply chains, Taiwan exposure, export controls, equipment restrictions, and industrial policy. SMH is exposed to all of that.

How SMH fits in the Five Fund Frame

In the Five Fund Frame, Dare is the optional conviction slot. It is where you put a bounded bet that could outperform dramatically but could also disappoint badly. SMH fits that definition better than it fits any core slot.

The practical rule: size SMH like a Dare position, not like a core holding. A 5% to 10% allocation can express conviction. A 30% allocation turns one industry cycle into your whole portfolio's problem.