Shares of VanEck Semiconductor ETF (SMH 2.75%) gained 12% in January, according to data from S&P Global Market Intelligence. This is a fantastic monthly gain, particularly given that the S&P 500 index was up about 1.5%.
The ETF slipped very slightly in the first week of February, as its year-to-date 2026 gain through Feb. 6 is 11.5%. That still compares very favorably to the broader market's 1.4% increase.
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A boost from shares of Micron and the semiconductor equipment makers
It's helpful to understand the ETF's overall composition. It has 25 stock holdings, with its top 10 holdings, in descending order, as follows, on Feb. 5:
- Nvidia (NVDA 1.24%), the AI semiconductor (or chip) leader
- Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest chip foundry
- Broadcom, a chip and software maker
- Micron Technology, a memory chip specialist
- ASML Holdings, a chip equipment maker
- Lam Research, a chip equipment maker
- Texas Instruments, a chipmaker
- Intel, a chipmaker
- Applied Materials, a chip equipment maker
- Analog Devices, a chipmaker
In January, three of these stocks posted gains of over 30% and two posted gains of over 20%, which powered the VanEck Semiconductor ETF's performance.
Micron stock was the top performer of this group last month, soaring 45.4%. The company reported stellar quarterly earnings in December, and the stock continued its steady climb in January. It has benefited from strong demand for memory chips to fuel the artificial intelligence revolution, which has led to a shortage.
In its fiscal first quarter (ended Nov. 27), Micron's revenue surged 57% year over year to $13.64 billion, and its adjusted earnings per share (EPS) skyrocketed 167% to $4.78. The biggest driver of this growth was the cloud memory unit, where revenue doubled to $5.3 billion and operating margin increased to 55% from 40% in the year-ago period.
ASML Holdings and Lam Research stocks jumped 33% and 36.4%, respectively, in January. A main catalyst for the chip equipment group came mid-month when TSMC reported results that significantly beat Wall Street expectations.
NASDAQ: SMH
Key Data Points
Nvidia earnings could be a big catalyst
Nvidia stock is VanEck Semiconductor's largest holding, accounting for 18.3% of its portfolio value as of Feb. 5. The second-largest holding, TSMC, accounts for 10.8%. Thus, Nvidia's upcoming earnings release could be a significant catalyst for the VanEck Semiconductor ETF.
Nvidia is scheduled to report its fourth-quarter and full-year fiscal 2026 (ended in late January) results on Wednesday, Feb. 25, after the market close. For the quarter, management guided for revenue to $65 billion, or growth of 65% year over year. It also guided (albeit indirectly, through several inputs) to adjusted EPS of $1.50, representing 69% growth.
VanEck Semiconductor ETF is the best AI ETF
As I wrote last January: "The best AI-focused ETF, in my opinion, is not one with artificial intelligence or AI in its name; it's the VanEck Semiconductor ETF." That's turned out to be a great call -- and I still believe it's true.
Over the one-year period through Feb. 6, this ETF returned 62.2% -- about quadruple the S&P 500's 15.4% return. It's also a big winner over longer periods.
