This has been an amazing year for tech stocks. The sector is the biggest in the S&P 500 and is having an outsize year, growing 22% so far in 2025. And there's lots of momentum for that to continue.
Investors love tech stocks because of their raw potential. They represent companies that are changing the world. Companies that manufacture semiconductors, software, infrastructure, and electronics are all helping to push the envelope, bringing about innovations that the finance, energy, and consumer goods sectors utilize.
Image source: Getty Images.
Semiconductors in particular are a massive investing opportunity. The global semiconductor market is expected to grow from $583.38 billion this year to $1.29 trillion by 2030, according to Statista, for a compound annual growth rate of 10.24%.
If you have $5,000 to invest in the tech sector, I've got two semiconductor names that should be on your buy list. One of them is a stock that's been on a record-setting run and appears destined for even greater gains. The other is an exchange-traded fund (ETF) that is heavily weighted with high-flying semiconductor stocks.
Both give you an outstanding chance to build wealth.
Stock choice: Nvidia
I don't like gambling with my money. And while nothing is ever certain in the stock market, Nvidia (NVDA +0.03%) looks to be as close to a sure thing as you can find.
Nvidia's mammoth run began in 2023 when the market realized how critical the company's graphics processing units (GPUs) would be to the future of artificial intelligence (AI). GPUs power high-performance computing tasks, such as the training of large language models, AI platforms, machine learning, and data analytics. An investment of $10,000 on Jan. 1, 2023, would have turned into $130,000 at this point.
CEO Jensen Huang bragged at the company's GTC D.C. conference last month that "our GPUs are everywhere," and he's absolutely right. As Nvidia announced deals with South Korean companies Samsung and Hyundai, the presidential office in Seoul announced that more than 260,000 of Nvidia GPUs will be deployed in the country.
NASDAQ: NVDA
Key Data Points
Nvidia also just announced a $1.15 billion partnership with the telecommunications company Deutsche Tekekom to build out AI capabilities in Europe, including powering a Munich data center with up to 10,000 Nvidia Blackwell GPUs.
Nvidia's revenue in the second quarter of fiscal 2026 (ended July 27, 2025) was $46.7 billion, with $41.1 billion of that coming from data centers. Nvidia's revenue was up 56% on a year-over-year basis, and I'm expecting even better numbers when it reports earnings again on Nov. 19.
Fund choice: VanEck Semiconductor ETF
It's never a good idea to put all your eggs in one basket. That's why I like ETFs, because they allow you the opportunity to stay laser-focused on a specific sector, like semiconductors, while also diversifying into several companies at the same time.
The VanEck Semiconductor ETF (SMH 0.85%) is a small ETF, holding only 25 companies, including Nvidia as the most heavily weighted stock.
|
Company |
Weighting |
|---|---|
|
Nvidia |
18.31% |
|
Taiwan Semiconductor Manufacturing |
9.38% |
|
Broadcom |
8.08% |
|
Advanced Micro Devices |
6.68% |
|
Micron Technology |
6.35% |
|
Lam Research |
5.75% |
|
Applied Materials |
5.52% |
|
ASML |
5.47% |
|
Intel |
5.47% |
|
Kla |
4.48% |
|
Qualcomm |
4.23% |
But it has some Nvidia competitors, too. And importantly, it also has some other important names, like Taiwan Semiconductor Manufacturing (TSMC), which is the largest chip manufacturer in the world. It also has ASML Holding and Lam Research, which make critical components that allow fabricators like TSMC to produce the chips.
The fund, which tracks the MVIS US Listed Semiconductor 25 Index, includes companies that generate at least half of their revenue from semiconductors or semiconductor equipment. The SMH ETF started its dramatic rise in the last several quarters as semiconductor sales took off, with a $10,000 investment three years ago being worth more than $38,000 now. The fund has an expense ratio of 0.35%, or $35 annually for each $10,000 invested.
NASDAQ: SMH
Key Data Points
How to invest $5,000
For these picks, I would put $2,500 into each name. True, you get a heavy exposure to Nvidia because it also carries the heaviest weight in the SMH ETF, but that's how confident I am in Nvidia at this point in its growth story.
Both of these names are generating better than 45% returns in 2025, which is twice the gain that you'd see from the tech-heavy Nasdaq Composite. That's a significant reward for investing in the hard-charging semiconductor industry today.
