The VanEck Semiconductor ETF (NASDAQ:SMH) trades near $502 as of this writing. The chip fund’s record close was $668.91, set on June 22, leaving it about 25% off that peak. And a big part of the drop came on Nov. 5, when the fund fell 11% in one session — its worst day since March 2020.
Investors dumped chip shares that day after the midterm elections stirred worries that spending on artificial intelligence (AI) data centers might slow. Qualcomm, one of the fund’s holdings, added to the pressure with a disappointing outlook for its current quarter.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
But the fund is up around 39% in 2026, after ending last year at $360.13. I think the slide has made it a good buy for investors willing to hold it through 2030.
Here’s a closer look at why I’d buy the fund at today’s price.
Image source: Taiwan Semiconductor Manufacturing Company.
The fund costs about what the S&P 500 costs
Showing how much has shifted since summer, the fund’s stocks traded at around 28 times earnings as of Oct. 31, according to VanEck. As of June 30, around a week after the peak, they traded at about 49 times earnings. At the end of January, the number was about 43 times earnings.
The fund’s price fell around 20% between the June and October readings. Most of the drop in its price-to-earnings ratio, then, probably came from its companies earning more, not just from their stock prices sliding.
This leaves the chip fund about on par with the broader market. The iShares Core S&P 500 ETF, which tracks the S&P 500 (SNPINDEX:^GSPC), put its holdings at around 28 times earnings as of Nov. 11.
Put another way, investors can get the 25 chip stocks in the VanEck fund at around the same price-to-earnings ratio as 500 of the largest U.S. companies. I’d say the chip fund is modestly priced for a group of businesses whose sales are rising this quickly.
Is the chip boom slowing?
Growth has slowed a little, but from an extraordinary pace. The Semiconductor Industry Association (SIA) said global chip sales hit $517.7 billion in the July-through-September quarter, up 24.1% over the second quarter. Second-quarter sales, in turn, had surged 35.1% over the first quarter. And first-quarter sales had risen about 25% from the fourth quarter of 2025.
Growth did cool in the third quarter. But sales still climbed more than 20% quarter-to-quarter for a third straight quarter, the trade group said, and September’s sales were up around 147% year over year. (The SIA’s monthly numbers are a three-month moving average.)
