Red-Hot Chip Stocks Are Lifting Tech ETFs. One ETF Has Doubled Since It Launched Last Month.

Key Takeaways

• Soaring memory and chip stocks have propelled unusually large gains for tech-focused ETFs this year.

• The chip rally has caused many ETFs to become concentrated around the AI data center theme, eroding what can be a core benefit of ETFs: diversification.

Some exchange-traded funds offer the safety of diversification at the expense of eye-popping returns. This year, returns are the story, especially at funds that hold big slugs of red-hot chip shares.

A handful of tech ETFs—especially those holding semiconductor stocks—are outperforming the market in dramatic fashion in 2026. The Roundhill Memory ETF (DRAM) leads the pack with a 99% return since its launch in early April. As its name suggests, the fund is tied to one of Wall Street’s favorite themes of late: the memory shortage caused by booming AI data center demand. DRAM offers exposure to “a precise basket of global memory chip companies” benefiting from “the multi-decade buildout of AI infrastructure,” according to Roundhill. (The S&P 500, for comparison, is up less than 10%.)

What This Means For You

As tech ETFs become more concentrated in volatile memory and semiconductor stocks, the funds grow more vulnerable to sharp swings in the share prices of their largest holdings. Greater concentration in high-flying stocks means a bigger lift on up days, but it also means a steeper drop on down days.

The vast majority of semiconductor ETFs are also trouncing the market. The Invesco Semiconductors ETF (PSI) has risen 97% this year. The fund tracks a proprietary index of 30 semiconductor stocks, making it more diverse than some of its peers, though huge gains in a single stock have recently increased the fund’s concentration risk; shares of MaxLinear (MXL), a chip designer with a fast-growing data center business, rose nearly 400% in the past month. As a result, the $8 billion company accounts for 10% of PSI, more than twice the weight of Nvidia (NVDA), a $5 trillion juggernaut. (Their weights may be adjusted during the index’s quarterly rebalancing at the end of the month.)

DRAM’s concentration—what Roundhill calls its “precise basket”—is one of the keys to its success. The ETF is composed of only nine stocks, and its top three holdings—Micron (MU), SK Hynix, and Samsung—account for nearly three-quarters of the fund. Those holdings have performed exceptionally well this year. Micron is up more than 175%, while SK Hynix and Samsung have risen about 190% and 140%, respectively. Smaller components have performed even better. Shares of SanDisk (SNDK), about 6% of the fund, are up 560% in 2026.

Other chip funds have been boosted by Intel (INTC), the S&P 500’s best-performing stock over the past month. Shares of the chipmaker last month closed at their first record high since 2000 after the company blew past earnings expectations due to “unprecedented demand” from the AI boom. Intel is the top holding in the First Trust Nasdaq Semiconductor Index (FTXL), up 90% this year, and the Xtrackers Semiconductor Select Equity ETF (CHPS), up 82%.

Chip stocks are increasingly in the drivers seat of tech funds that ostensibly target broader themes. Micron, SK Hynix, and Intel account for more than a quarter of the Invesco AI and Next Gen Software ETF (IGPT), an index of “companies with significant exposure to technologies or products that contribute to future software development.”

The fund has long held semiconductor stocks, but their weight in the index ballooned over the past year as chip stocks rallied and software stocks slumped amid mounting uncertainty about AI’s impact on the industry. Between early 2025 and 2026, software’s share of the index declined from 21% to 11%, while semiconductors’ share increased from 31.5% to 45%.

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