The semiconductor sector is an attractive investment option, but building an investment portfolio in the tech sector is quite challenging, regardless of an investor’s risk appetite. If you ask any investor about their preferred stock in the semiconductor sector, chances are that most of them will say Nvidia.
Nvidia and ETFs with the weight of semiconductors
No doubt Nvidia is a semiconductor giant, and buying into it is a good choice, but recently, ETFs like Invesco QQQ Trust and Invesco NASDAQ 100 ETF have also shown quite some growth as their portfolios have a good weight of Nvidia itself.
At a time when the world’s euphoria about artificial intelligence has catapulted Nvidia’s stock to a many-fold surge, some of the financial managers and witty individual investors are looking for options beyond Nvidia.
Though Nvidia stock has increased by three times its value over the past year, and by 15% during the past week when tech giants announced heavy investment in AI infrastructure during their earnings calls for the first quarter, a bit of diversification can still provide a way to best capitalize in the long term on AI-related investments.
There are other factors at play when we speak of AI investments, and they include an expansive set of niche segments and emerging players in algorithm development and computing. All these things can increase the demand for computer hardware and software, and this makes ETFs a good choice as they have significant exposure to these industries.
Other players and niche segments
Looking at the other players in the semiconductor industry, Korea’s Hanmi Semiconductor has increased by 120% this year, and the company’s share has also been bought by foreign investors in the last month. In other markets, Vietnam’s FPT Corp., which is an IT service provider, also observed a growth of 20% this year, and as Ashmore EM Frontier Equity Fund has stakes in the company, it benefited from this jump as the best performer in US emerging markets funds.
Morgan Stanley is also eyeing firms that are remodeling the business structures in non-tech industries, and JPMorgan is trying to capitalize on electronic manufacturers, the traditional ones, who are now evolving into AI leaders.
AI supply chain component manufacturers are also key players in AI, and Goldman Sachs asset management division is focusing on manufacturers of power supplies and cooling systems. JPMorgan has also predicted that the tech companies that have been supplying components to the big brands may also become potential players, so they are also a good option.
Alibaba Group Holding Ltd. has also entered into a partnership with Saudi Telecom Co., which makes it the largest Chinese investor in cloud AI ventures in Saudi Arabia, and Amazon has also pledged to build a big datacenter in the country. National players like Reliance in India also have potential, as it has launched a chatbot that has the capability to work in 22 local Indian languages, and Goldman Sachs thinks that national champions are to be looked for as they are developing AI in their own markets.
