"The Invesco Semiconductors ETF ( NYSEARCA:PSI) has captured the AI infrastructure boom with a 45% surge over the past year. This rally reflects the fund's concentrated strategy of placing focused bets on equipment manufacturers and memory chips rather than diversifying across all chip types. That specialization creates both opportunity and risk. The fund's nearly $1 billion in assets tracks just 30 companies with overwhelming technology sector concentration, meaning when semiconductor equipment and memory cycles align, PSI outperforms-but when they turn, losses amplify."
"Memory chip pricing drives PSI more than any other factor. Companies like Micron Technology ( NASDAQ:MU), the fund's largest holding at 6.5%, benefit when data center operators need more DRAM and NAND flash memory. Micron's recent fourth quarter earnings of $4.78 per share crushed expectations, marking a dramatic reversal from the memory downturn. This turnaround stems from AI workloads driving unprecedented demand for memory that powers data centers."
PSI surged 45% over the past year by focusing on semiconductor equipment manufacturers and memory chipmakers rather than broad chip diversification. The ETF holds roughly $1 billion across 30 companies with heavy technology-sector concentration, which magnifies gains when memory and equipment cycles align and amplifies losses when they reverse. The fund's 16% year-to-date gain lags the broader SMH, reflecting its distinct risk-return profile. Memory pricing, notably DRAM and NAND demand, drives performance with Micron (6.5%) central after a $4.78 EPS quarter. AI-driven data-center demand fuels the recovery, but memory cycles remain volatile and equipment spending will signal the next market move.
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