Chips and Shadows: A Gamble on the Machine

They speak of an age of intelligence, artificial and gleaming. A new dawn for capital, they proclaim. But I see only gears grinding, and the faces of those who will grease them. This ‘generative AI’ – a fancy name for machines that mimic creation – is not a gift, but another lever to shift the weight onto already burdened backs. It promises fortunes, yes, but for whom? The question hangs, heavy as a factory’s dust.

that such growth demands a corresponding extraction. Someone will pay the price for these inflated valuations. And it won’t be the men in silk suits.

Investing in this frenzy, then, is a gamble. A calculated risk, perhaps, but a risk nonetheless. Rather than chasing individual stars – a fool’s errand – one might consider these ‘exchange-traded funds’. A basket of companies, they say. Diversification. A way to spread the risk, and, hopefully, capture a sliver of the profit before the whole thing comes crashing down. I’ve examined a few. They offer a glimpse into the machinery of this new age, and the hands that control it.

VanEck Semiconductor ETF

The VanEck Semiconductor ETF (SMH +0.22%) – a mouthful, isn’t it? – tracks the companies that make the machines. Nvidia, Taiwan Semiconductor, Broadcom… names that ring with power. Nearly half the fund’s value is tied to these few. They are the architects of this digital world, and they will reap the largest rewards. Nvidia and Broadcom build the engines, Taiwan Semiconductor forges the parts, ASML crafts the tools, and Micron stores the data. A neat little ecosystem, all feeding on the same insatiable hunger.

This fund has risen sharply in the past year, they boast. Fifty-nine percent. But remember, a rising tide lifts all boats, even the leaky ones. The expense ratio is a modest 0.35%. A small toll, perhaps, for the privilege of participating in this grand speculation.

State Street SPDR S&P Semiconductor ETF

The State Street SPDR S&P Semiconductor ETF (XSD +0.46%) – a wider net, they claim. Forty-three companies, spread across the landscape. An attempt to mitigate risk, perhaps, by avoiding overreliance on a few dominant players. It’s an equal-weight fund, meaning smaller companies have a voice, too. A noble gesture, but will it truly matter when the giants begin to move?

Micron Technology, Macom Technology Solutions, Power Integrations… names less familiar, but equally vital. They account for a small portion of the fund, a scattering of crumbs from the feast. The fund has risen 41% in the last year. Solid, but not spectacular. It’s a safer bet, perhaps, but safety rarely yields great rewards.

iShares Semiconductor ETF

The iShares Semiconductor ETF (SOXX +0.15%) – a more focused approach. U.S. companies only. A patriotic fund, perhaps, or simply a desire to avoid the complexities of international markets. Managed by BlackRock, a name synonymous with power and influence. It’s a market-cap weighted fund, meaning the largest companies hold the most sway.

Nvidia, Micron, Advanced Micro Devices, Applied Materials, Broadcom… the usual suspects. They collectively control a significant portion of the fund. The expense ratio is a touch lower, at 0.34%. A small concession, perhaps, for the privilege of investing in a fund managed by such a formidable institution. The fund has risen 56% in the past year. A respectable performance, and a solid bet to outpace the growth of this ‘generative AI’ – if, indeed, such growth is sustainable.

In the end, these funds are merely instruments. Tools for those who seek to profit from the labor of others. They offer a glimpse into the machinery of this new age, but they reveal little about the human cost. Invest if you must, but remember this: the gears will keep turning, regardless of your gains or losses. And someone, somewhere, will always be left to grease them.

2026-01-23 13:22

VanEck Semiconductor ETF

State Street SPDR S&P Semiconductor ETF

iShares Semiconductor ETF

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