Play artificial intelligence with semiconductor ETF: VanEck CEO

Investing in semiconductors may be the most efficient way to capitalize on the boom in artificial intelligence, according to VanEck’s CEO.

“Semiconductors have become the heart of the AI ​​business,” Jan van Eck told CNBC’s “ETF Edge” this week.

That of his company VanEck Semiconductor ETF (SMH), which tracks 25 of the country’s largest chipmakers, is up 21% this year as of Wednesday’s close. However, SMH is down almost 6% this month, leading to a downward trend Intel, AMD And About semiconductor.

The fund’s top position, Nvidiahas seen its shares rise nearly 70% this year amid rising demand for its AI processors, but is also down 7% since the start of the month.

Van Eck suggests that the weakness is temporary. He claims that strong interest in AI chips could provide the group with more sustainable returns.

“They’ve revalued from being a very cyclical company with a short product lifespan to being part of the growth business, and they have more recurring revenue so they can just maintain high profitability despite the short-term business,” Van Eck says.

ETF Action founder Mike Akins also sees opportunities for investors. He thinks limited competition for some of the top chip makers could support the group.

“You have a high moat and they control that price level,” he said in the same interview. “Until there is a situation where competition in this area increases meaningfully and there is some price pressure, it is difficult to see that trade disappearing.”

Still, Akins advises investors to pay attention to semiconductor fund flows as a barometer of future performance.

“We often warn our customers to look at flows almost as a contrarian indicator. If flows really come under pressure, that’s a potential buying opportunity, and vice versa. Now that flows are really increasing, it may be time to make some cuts .”

Disclaimer