The iShares Semiconductor ETF (SOXX) returned 190.03% over the past year, outpacing the SPDR S&P Semiconductor ETF (XSD), which returned 180.24% over the same period.
The gap is small in percentage points but large in implication: SOXX also led year to date, up 104.57% versus XSD's 102.14%, and it has outperformed over five years with a 340.13% return against XSD's 266.82%. Other funds show wider dispersion — the VanEck Semiconductor ETF (SMH) posted 422.86% over five years — while newer entrants such as SOXQ have also drawn attention, closing at $109.58 on June 3, 2026 with a 181.74% one‑year return and 96.71% year‑to‑date advance.
The mechanics behind the numbers are straightforward: SOXX is cap‑weighted, which funnels the biggest inflows into the largest semiconductor names; XSD uses an equal‑weight approach that deliberately reduces concentration in megacaps. That structural difference shows in holdings. SOXX concentrates assets in NVIDIA, Broadcom, AMD, ASML, Applied Materials and Lam Research, while XSD’s top weights are far smaller by percentage — Marvell Technology at 3.06%, Power Integrations at 3.05%, Cirrus Logic at 2.98% and Analog Devices at 2.78%.
The market backdrop helped amplify those allocation effects. Worldwide semiconductor revenue reached $298.5 billion in Q1 2026, up 79.2% from Q1 2025, and the AI capex cycle has been a major driver of that surge. NVIDIA’s outsize role in AI chips has been a force in portfolios that overweight the largest names; the company also faced an anticipated $8 billion impact from U.S. chip‑export restrictions to China, but hyperscaler demand from Microsoft, Amazon and Google helped offset that loss. Broadcom’s custom ASIC business and networking silicon similarly positioned it to benefit from hyperscaler build‑outs, and AMD registered a 168.31% 12‑month gain heading into mid‑2026.
The practical takeaway for investors is trade‑offs. SOXX captured more of the rally because megacap winners have dominated returns; equal‑weight XSD lagged in percentage terms but spreads risk across a broader roster of smaller chipmakers. That matters because equal weighting can blunt both upside and downside tied to a handful of names — the exact benefit the friction point highlights: XSD’s equal‑weight approach can help if NVIDIA stumbles or AI capex decelerates, even though SOXX has outperformed over longer periods.
Other ETFs illustrate the same choices. SOXQ, launched in June 2021, crossed $1 billion in assets under management as of February 2026 and shows how a newer product can accumulate concentrated holdings quickly — its top 10 accounted for 59% of assets in February 2026 — while expense structures vary as well, with SOXQ carrying a 0.19% expense ratio.
What comes next depends on the market’s center of gravity. If AI spending stays concentrated with the dominant chipmakers, cap‑weighted SOXX is likely to continue to lead; if spending broadens across networking silicon, analog and niche suppliers, equal‑weight XSD would stand to close the gap. The unanswered, consequential question for investors is whether the AI capex cycle will remain centralized around a few giants or broaden enough to reward a more diversified semiconductor exposure.
