VanEck CEO said investing in semiconductors may be the most effective way to fuel the artificial intelligence boom.
“Semiconductors have become central to the artificial intelligence industry,” Jan van Eck told CNBC’s “ETF Edge” this week.
of his company VanEck Semiconductor ETF (SMH)Shares of the country’s 25 largest chipmakers tracked by the company were up 21% this year as of Wednesday’s close.However, SMH has fallen nearly 6% this month, leading to losses Intel, AMD and ON Semiconductor.
The fund’s largest holding, NvidiaThe company’s shares have soared nearly 70% this year as demand for artificial intelligence processors surges, but they have also fallen 7% since the beginning of the month.
Van Eck said the weakness was only temporary. He believes that high interest in artificial intelligence chips can enable the group to achieve more lasting returns.
“They have transformed from highly cyclical businesses with short product life cycles to being part of a growth trade and have more recurring revenue, so they can maintain high profitability even if there are some short-term issues,” Fan said. Oops .
ETF Action founding partner Mike Akins also sees opportunities for investors. He believes limited competition from some top chipmakers’ products can sustain the group’s growth.
“You have a high moat and they control that pricing point,” he said in the same interview. “Unless competition in this space increases significantly and you may have some pricing pressure, it’s hard to see this trade disappearing.”
Still, Aikins recommends investors focus on semiconductor capital flows as a barometer of future performance.
“We often remind clients to think of traffic as a contrarian indicator. When traffic gets really low, that’s a potential buying opportunity and vice versa. As traffic really expands, it might be time to cut back a little bit.”
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