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Without advanced chips and components, the artificial intelligence (AI) revolution will stall.
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Nvidia, Advanced Micro Devices and Micron supply some of the critical hardware and will see their share grow by an average of 119% by 2025.
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The iShares Semiconductor ETF specializes in investing in semiconductor companies that benefit from megatrends like artificial intelligence.
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10 stocks we like better than iShares Trust – iShares Semiconductor ETF ›
Top artificial intelligence (AI) developers like OpenAI and Anthropic are constantly launching new models, each one “smarter” and more capable than the last. However, each new model also absorbs more computing power than its predecessor and therefore requires more data center capacity.
Some of the largest suppliers of AI infrastructure, chips and components include NVIDIA (NASDAQ: NVDA), AMD (NASDAQ:AMD)and Micron Technology (NASDAQ:MU). In 2025 alone, the share prices of these three companies will soar by an average of 119%, crushing S&P 500 Index The index rose only 18%.
In other words, investors with little or no exposure to the AI semiconductor space this year are likely to underperform.
Fortunately, there’s an easy way to get a piece of this fast-growing industry without having to pick winners and losers. this iShares Semiconductor ETF (Nasdaq: SOXX) is an exchange-traded fund (ETF) that invests exclusively in companies such as Nvidia, AMD, Micron, and many of their peers. Here’s how it turns a $250,000 investment into $1 million over the next 10 years.
The iShares Semiconductor ETF invests only in U.S. companies that design, distribute and manufacture chips and components, but primarily those that benefit from opportunities such as artificial intelligence. With a portfolio of only 30 stocks, its focus is narrow. The fund’s holdings are also quite top-heavy, with its three largest holdings having a combined weight of 22.7%:
|
in stock |
iShares ETF Portfolio Weights |
|---|---|
|
1. NVIDIA |
8.22% |
|
2. Advanced Micro Devices (AMD) |
7.62% |
|
3. Micron Technology |
6.88% |
Data source: iShares. Portfolio weightings are accurate as of December 24, 2025 and are subject to change.
Nvidia’s graphics processing units (GPUs) are the best chips on the market for developing artificial intelligence models. Its current Blackwell Ultra series is designed to provide enough computing power for the industry’s latest inference models, such as OpenAI’s GPT 5.2, Anthropic’s Claude 4.5 and letterGemini 3. I believe Nvidia stock remains cheap despite rising 41% in 2025, leaving plenty of room for further upside.
AMD is catching up with Nvidia in the data center chip market. The company’s latest MI350 series of GPUs have won top customers from some major rivals, but there’s still a gap in performance. Next year, AMD plans to launch a new MI400 GPU as part of a fully integrated data center rack called Helios, which will provide 10 times the performance of the MI350 GPU. By then, the company could pose a real threat to Nvidia.
Then there’s Micron Technology, one of the world’s leading suppliers of memory and storage chips. Both Nvidia and AMD have integrated Micron’s HBM3E (High Bandwidth Memory) solution into their data center GPUs to unleash their maximum processing speeds. Micron’s entire 2026 data center memory supply has been sold out, including its upcoming HBM4E solution, which promises to increase capacity and energy efficiency.
In addition to the top three stocks, the iShares ETF also holds several other top AI semiconductor stocks, such as Broadcom, Texas Instrumentsand TSMC.
The iShares Semiconductor ETF is on track to deliver an eye-popping 43% return by the end of 2025. That’s unsustainable in the long term, but the ETF has delivered a compound annual return of 27.2% over the past decade, so it’s no stranger to high growth. Even with its average annual gain of 11.8% since its inception in 2001, it still outperforms the performance of the S&P 500 over the same period.
Here’s how long it might take the iShares ETF to turn a $250,000 investment into $1 million, based on three different average annual returns:
|
initial investment |
compound annual return |
It’s time to hit $1 million |
|---|---|---|
|
$250,000 |
11.8% |
13 years |
|
$250,000 |
19.5% (midpoint) |
8 years |
|
$250,000 |
27.2% |
6 years |
Author’s calculations.
Nvidia CEO Jensen Huang said annual spending on artificial intelligence data center infrastructure and chips could reach $4 trillion by 2030. If that happens, the iShares ETF could deliver compound annual returns in excess of 20% for the foreseeable future. But to be clear, this situation is unsustainable under normal circumstances due to the law of large numbers.
For example, Nvidia is already a $4.6 trillion company. If its market capitalization grows by 27.2% annually over the next ten years, its value will be close to $50 trillion. The entire U.S. economic output in 2024 will be less than $30 trillion, so although artificial intelligence is a revolutionary technology, it is important for investors to adjust their expectations.
Fortunately, even if the iShares ETF returns just under 20% annually, it can still turn $250,000 into $1 million over the next 10 years. According to the table above, if investors are a little more patient, this ETF could also help them join the million-dollar club in 13 years, even if its returns fall significantly back to the long-term average of 11.8%.
But I think returns are likely to remain high for now, given that almost every chipmaker is facing demand that exceeds its ability to supply.
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Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool holds and recommends Advanced Micro Devices, Alphabet, Nvidia, TSMC, Texas Instruments and the iShares Trust-iShares Semiconductor ETF. “Motley Fool” recommends Broadcom. The Motley Fool has a disclosure policy.
Nvidia, AMD, and Micron Technology could help this unstoppable ETF turn $250,000 into $1 million in 10 years Originally published by Motley Fool