SMH vs SOXX vs SOXL: AI Chip ETF Rally Hits Its Hardest Test Yet

New York, May 12, 2026, 11:02 (EDT)

Semiconductor ETFs took a steep dive on Tuesday. The leveraged Direxion Daily Semiconductor Bull 3X Shares plunged nearly 12.4% just before 11 a.m. in New York—a sharp swing for a fund that’s been one of 2026’s most popular AI hardware bets. Losses rippled across the sector: VanEck Semiconductor ETF fell around 3.5%, iShares Semiconductor ETF slipped 4.1%, and First Trust Nasdaq Semiconductor ETF dropped close to 4.5%.

This move landed just a day after both the S&P 500 and Nasdaq notched record closes, coming on the heels of a U.S. inflation report that hit hotter than expected and dented optimism for looser policy. According to Reuters, consumer prices in April climbed 3.8% year-over-year, topping the 3.7% forecast from economists. Doug Beath, global equity strategist at Wells Fargo Investment Institute, pointed out that markets have been “slow to appreciate the economic damage” caused by higher prices. Reuters

The core thesis hasn’t changed: bigger AI data centers are gobbling up chips, memory, networking equipment, and power solutions. For investors who don’t want to pick a single stock, ETFs offer a way in—baskets that trade on the market just like shares. TipRanks recently spotlighted SMH, SOXX, and SOXL, each taking a slightly different approach to the same chip upcycle. Over at 24/7 Wall St., they noted that SOXX, SMH, and FTXL all surged as the AI infrastructure wave gained momentum.

Last week, AMD added more fuel to that narrative. First-quarter revenue climbed 38% year-over-year to $10.253 billion, with its Data Center business jumping 57% to $5.8 billion. CEO Lisa Su credited “accelerating demand for AI infrastructure” and pointed to Data Center as the company’s main growth engine now. Looking ahead, AMD guided for around $11.2 billion in second-quarter revenue. Advanced Micro Devices, Inc.

Still, these funds take different approaches. As of May 11, VanEck’s SMH counted 26 stocks. Nvidia made up 16.44%, with Taiwan Semiconductor Manufacturing Co. at 9.42%. Intel stood at 8.46%, Broadcom weighed in at 7.17%, and AMD came in at 7.03%. Year-to-date, SMH posted a 60.05% return. Net assets, $65.12 billion.

BlackRock’s SOXX offers a wider reach, holding 30 stocks and managing $34.37 billion in net assets, charging a 0.34% expense ratio. Year to date through May 11, its NAV total return stood at 77.08%—topping SMH for a standard ETF, but it can lack the outsized moves seen when top chip names surge.

FTXL takes a different approach. According to First Trust, the fund follows the Nasdaq US Smart Semiconductor Index, ranking stocks by gross income, return on assets, momentum, and cash flow. As of May 11, Intel, Micron, Qualcomm, Broadcom, Nvidia, and AMD made up its largest positions, reflecting a more factor-based selection versus the big market-cap chip ETFs.

SOXL stands out, and Tuesday’s action made that clear. According to Direxion, the fund aims for 300% of the NYSE Semiconductor Index’s daily move—before fees and expenses. Over stretches longer than a single day, it’s not designed to triple the benchmark’s total return. This is a trading vehicle, not your typical buy-and-hold chip play.

The field is getting more crowded. Since its April debut, the Roundhill Memory ETF has surged 99%, according to Investopedia. Invesco Semiconductors ETF notched a 97% gain this year. Both moves point to a shift: Many investors are no longer sticking with Nvidia alone, instead gravitating to more focused memory and chip funds benefiting from AI server demand.

The AI infrastructure story stretches beyond chips. Eaton, known for power-management gear found in data centers and industrial settings, reported a 17% jump in first-quarter sales to $7.5 billion. Orders for Electrical Americas soared 42% over the trailing 12 months, data center demand doing much of the heavy lifting. CEO Paulo Ruiz highlighted “order strength” and “backlog growth,” but shares have also shown just how fast investors react when guidance lags their hopes. Eaton

The risk is right there. That surge in semiconductor ETF gains, all thanks to heavy concentration, can turn into sharper losses once worries over inflation, oil, or rates start showing up. Should AI capital spending stumble—or even lose its sense of inevitability—SMH with its big-name bets, SOXX’s broad exposure, FTXL’s factor-driven strategy, and SOXL’s leverage all stand to react differently.

Right now, the split works. SOXX stands in as the broad play on chips, while SMH sticks closer to the top AI suppliers. FTXL? That’s the factor-driven and second-tier beneficiary angle. SOXL goes to traders with short-term guts. The AI buildout narrative stayed intact after Tuesday’s slip, but the price of chasing it is getting harder to brush aside.