KEY POINTS
- The AI chip selloff has left semiconductor shares well off their highs, and some investors see a buying opportunity.
- Buying an ETF spreads your money across many chip makers, lowering the risk of betting on a single stock that keeps falling.
- Two strong options trade on the ASX (SEMI and NDQ), and two of the biggest sit on Wall Street (SMH and SOXX).
- We see ETFs as the lower-risk way to play the theme, though the whole sector stays volatile.
The recent selloff in AI chip stocks has knocked semiconductor shares well below their highs, and bargain hunters are asking how to buy in. The trouble with picking a single stock is that after a sharp fall, you cannot be sure which name recovers and which keeps sliding. In our view, an exchange-traded fund (ETF) is the simpler answer, since it spreads your money across many chip makers at once. If you are weighing whether the chip selloff is a dip to buy or the top, a basket is the lower-risk way to take that bet. Here are four worth knowing on the ASX and Wall Street.
Two Ways to Buy the Dip on the ASX
For Australians, the easiest starting point is the Global X Semiconductor ETF (ASX:SEMI). It holds around 30 of the world’s biggest chip names, including Nvidia, Broadcom, AMD and TSMC, in a single ASX trade. Because it is Australian-based, there is no US tax paperwork to deal with, and it charges 0.45% a year. The trade-off is that it is highly concentrated in one industry, so it swings hard when the chip cycle turns.
A broader choice is the Betashares Nasdaq 100 ETF (ASX:NDQ). Rather than pure chips, it holds the 100 largest companies on the Nasdaq, which are packed with AI and chip names but also include the likes of Apple and Microsoft. That makes it less of a direct chip bet, but more diversified, which cushions the blow when semiconductors sell off. It charges 0.48% a year and, like SEMI, needs no US tax paperwork.
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Two More on Wall Street
If you have access to US markets, the VanEck Semiconductor ETF (NASDAQ:SMH) is the heavyweight, holding the 25 largest US-listed chip stocks for a low 0.35% fee. It is very concentrated, though, with Nvidia alone close to a fifth of the fund, so it rises and falls sharply. It dropped around 4 to 5% in the recent selloff.
The iShares Semiconductor ETF (NASDAQ:SOXX) is a gentler version of the same idea. It holds about 30 chip stocks for a similar 0.35% fee and caps how big any single company can get, so it leans less heavily on Nvidia. For investors who want chip exposure without such a large bet on one name, it is worth a look.
Which One Is Right for You?
Our take: the choice comes down to how much risk and paperwork you want. For most Australians, SEMI is the simplest, cleanest way to buy the chip theme without US admin, while NDQ offers a more diversified, lower-volatility option. The US funds, SMH and SOXX, give purer and cheaper exposure but add currency risk and tax forms.
Whichever you choose, the sector is still volatile, and buying the dip only pays off if the AI demand story holds. We believe it does, but not without bumps, and how the market handles the week ahead will tell us plenty. Spreading your money across a basket, rather than a single stock, is simply the more sensible way to take that bet.
Want to know which AI and chip investments are best placed for the next phase? Download our free report on the names and funds worth watching.
