BlackRock manages $10 trillion price of assets on behalf of its clients, making it a very powerful company of its kind on the planet. It invests in all of the pieces from residential and industrial real estate to America’s largest technology firms to have the opportunity to assist its clients meet their financial goals.
BlackRock can be the parent company of iShares, which manages greater than 1,400 exchange-traded funds (ETFs) designed to position quite a number of asset classes on the fingertips of investors of all skill levels.
The iShares Semiconductor ETF (NASDAQ: SOXX) invests in a number of the world’s top chip firms, which can be on the forefront of the bogus intelligence (AI) revolution.
The iShares Semiconductor ETF just completed a stock split
The iShares Semiconductor ETF delivered a compound annual return of 30% over the past five years, soaring to $680 per share, which made it somewhat inaccessible to smaller investors. For this reason, iShares executed a 3-for-1 stock split, which increased the range of shares in circulation threefold, while reducing its stock price by two-thirds.
It had no impact on the value of the ETF, but investors can now buy in for as little as $237 (as of this writing), making it accessible to a wider audience.
The momentum inside the iShares Semiconductor ETF will likely proceed given the sheer size of the AI opportunity. Here’s the way in which it could turn a $200,000 investment into greater than $1 million over the next 10 years — but don’t be concerned, investors with any amount of starting capital can take advantage of a fivefold return if this scenario plays out.
The iShares Semiconductor ETF invests on the planet’s top chip stocks, including Nvidia
AI wouldn’t exist without the powerful data center chips designed to help developers construct, train, and deploy their models. Nvidia (NASDAQ: NVDA) is the leader in that segment by a mile, and it’s reaping substantial results from the success of its industry-leading H100 graphics processing unit (GPU).
Nvidia has a market cap of $2.3 trillion as of this writing (only Apple and Microsoft are price more) and over $1.5 trillion of that value was added inside the last 12 months alone. The powerful returns inside the iShares Semiconductor ETF today aren’t any surprise when you consider Nvidia is its largest holding.
The ETF holds a stake in 30 semiconductor stocks, however it surely’s heavily weighted toward its top five positions, which account for 41.2% of the value of its entire portfolio:
|
Stock |
ETF Weighting |
|---|---|
|
1. Nvidia |
11.27% |
|
2. Advanced Micro Devices |
10.33% |
|
3. Broadcom |
8.66% |
|
4. Qualcomm |
6.21% |
|
5. Intel |
4.75% |
Data source: iShares. Portfolio weightings are as of March 6, 2024, and are subject to change.
While Nvidia dominates the marketplace for AI data center chips today, Advanced Micro Devices (AMD) is now shipping competing hardware. Plus, AMD has an estimated 90% market share inside the AI chips designed for edge computing (computers and mobile devices), which can thoroughly be the industry’s next frontier.
Outside of its top five positions, the iShares Semiconductor ETF also holds Taiwan Semiconductor, which manufactures greater than half of the world’s chips — including the data center GPUs designed by Nvidia and AMD. The ETF also holds Micron Technology, a primary producer of memory (DRAM) and storage (NAND) chips, which can be increasingly vital with the rise of AI.
SOXX could turn $200,000 into $1 million inside 10 years
The iShares Semiconductor ETF has returned 60% over the past yr, greater than doubling the 28% return of the benchmark S&P 500 index. It’s even higher than the 48% gain inside the tech-heavy Nasdaq-100 index.
That outperformance will not be an anomaly, because the iShares Semiconductor ETF delivered a compound annual return of 30% over the past five years, and 25% over the past 10 years. The S&P 500 rose 14% and 13% across those time frames, respectively.
If the iShares Semiconductor ETF were to deliver a 25% annual return over the next 10 years, it would turn an investment of $200,000 into greater than $1.8 million. It’s a high bar, but Wall Street’s estimates for the financial impact of AI are measured inside the trillions of dollars. With Nvidia and AMD representing such a giant percentage of the ETF, continued outperformance within the approaching years can’t be ruled out.
But even when the iShares Semiconductor ETF returned a more modest 15% annually on average over the next decade, it would still deliver a spectacular financial gain for investors. The below table shows how a difference in annual return would affect an initial outlay of $200,000:
|
Initial Investment |
Compound Annual Return |
Balance After 10 Years |
|---|---|---|
|
$200,000 |
15% |
$809,111 |
|
$200,000 |
20% |
$1,238,347 |
|
$200,000 |
25% |
$1,862,645 |
Calculations by author.
The iShares Semiconductor ETF is an incredible bet on the long term of AI, and its recent stock split gives investors of all experience levels the possibility to buy in.
Must you invest $1,000 in iShares Trust – iShares Semiconductor ETF without delay?
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Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Idiot has positions in and recommends Advanced Micro Devices, Apple, Microsoft, Nvidia, Qualcomm, and Taiwan Semiconductor Manufacturing. The Motley Idiot recommends Broadcom and Intel and recommends the subsequent options: long January 2023 $57.50 calls on Intel, long January 2025 $45 calls on Intel, long January 2026 $395 calls on Microsoft, short January 2026 $405 calls on Microsoft, and short May 2024 $47 calls on Intel. The Motley Idiot has a disclosure policy.
1 Stock-Split ETF That Could Turn $200,000 Into $1 Million in 10 Years, With Nvidia’s Help was originally published by The Motley Idiot