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Find the Next NVIDIA With This Semiconductor ETF
Reported by Jordan Chussler. Publication Date: 1/2/2026.
In Brief
- Last year, NVIDIA outperformed the market, but other semiconductor stocks posted better gains.
- The SPDR S&P Semiconductor ETF holds a basket of semiconductor stocks that can provide investors with broad industry exposure.
- In 2025, the fund returned more than 29%—better than the tech sector and the broad S&P 500.
The AI trade proved its worth again last year, as tech stocks finished with more than a 22% gain. That helped the sector outperform the broad S&P 500 for the 11th time in the past 12 years.
When it comes to pure-play AI stocks, NVIDIA (NASDAQ: NVDA) captures most of the attention. The Magnificent Seven mainstay and the largest publicly traded company by market cap gained nearly 36% in 2025 and is up 1,336% over the past five years.
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Discover how to invest in the fund Trump uses to collect this income >>Yet despite its accolades, NVIDIA actually played second fiddle to another AI-leveraged semiconductor company last year: Micron Technology (NASDAQ: MU), which arguably won 2025's AI race with an impressive gain of more than 235%.
For investors hunting the next big semiconductor stock, however, betting on a single company is risky. A thematic ETF that provides broad industry exposure can be a better way to identify up-and-coming semiconductor names.
The U.S. Semiconductor Market Is Rapidly Expanding
Industry consultancy Grand View Research estimates the U.S. semiconductor market at $9.17 billion in 2024 and forecasts a compound annual growth rate (CAGR) of 7.3% from 2025 through 2030.
Grand View says much of that growth will be driven by rising demand in wired and wireless communications, consumer and industrial electronics, automotive systems, computing, and data storage.
Specific to the U.S., the report notes the "semiconductor devices industry is witnessing a surge in the adoption of artificial intelligence (AI) and Internet-of-Things (IoT)-driven chip designs."
Those findings are reinforced by a McKinsey report from November 2025, which projects the global semiconductor market could reach $1 trillion by 2030, with the United States accounting "for 30% of advanced-node semiconductor fabrication capacity."
With many startups trying to take market share from dominant players such as NVIDIA and Micron, picking the next big winner among individual semiconductor stocks can feel like a shot in the dark.
For ETF investors, though, looking at a fund's holdings can indicate which companies are most likely to come out on top.
A One-Stop-Shop Thematic Semiconductor ETF
The SPDR S&P Semiconductor ETF (NYSEARCA: XSD) offers broad exposure to the industry. Managed by State Street, the fund "allows investors to take strategic or tactical positions at a more targeted level than traditional sector-based investing."
XSD manages $1.61 billion in assets and carries a net expense ratio of 0.35%; its dividend currently yields about 0.25% (roughly $0.82 per share annually), partially offsetting the fund's costs.
Surprisingly to some investors, NVIDIA is included in XSD's holdings but ranks only 19th by weight. That's because the passively managed fund tracks the S&P Semiconductor Select Industry Index, a modified equal-weight benchmark that can cap allocations to the largest stocks so smaller companies receive meaningful exposure.
As a result, the index currently favors companies such as Micron, Rigetti Computing (NASDAQ: RGTI), Intel (NASDAQ: INTC), SiTime (NASDAQ: SITM), and MACOM Technology Solutions (NASDAQ: MTSI), which make up the ETF's top five holdings. Advanced Micro Devices (NASDAQ: AMD), which gained nearly 79% last year, is the sixth-largest allocation.
The XSD's Strong Performances Are Likely to Continue
In 2025, XSD gained more than 29%—outperforming the tech sector (22.3%) and the S&P 500 (17.51%).
Given the semiconductor industry's multiple tailwinds heading into 2026, Wall Street expects another strong performance for the fund.
Based on 675 analyst ratings covering the top 25 companies in the SPDR S&P Semiconductor ETF—more than 75% of its portfolio—the fund receives a Moderate Buy rating. Most holdings carry Moderate Buy, Buy, or Strong Buy ratings; only one company has a Sell rating.
Underscoring that sentiment, short interest heading into 2026 stands at just 2.22% of the float (about $34 million), down sharply from $4.97 billion worth of shares shorted on June 30.
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