The artificial intelligence (AI) revolution continues to attract traders as the noise around the sector reaches a feverish pitch. The demand for sophisticated microchips is increasing as AI applications gain traction in consumer, healthcare, industrial, retail, and many other settings. The 2024 chip stock rally has been supported by positive earnings surprises from Qualcomm (QCOM), ARM Holdings (ARM), Taiwan Semiconductor Manufacturing Co (TPE: 2330) and others.

The key driver is AI's potential to revitalize an industry recovering from a lengthy supply chain crisis. Grand View Research predicts that the global AI market will grow 37.3% annually by 2030 and reach $1.8 trillion.

As machines harness the ability to think, how we work, learn and interact with technology could change dramatically. Last week, the Semiconductor Industry Association (SIA) reported that global microchip sales are projected to grow more than 13% in 2024 alone, building off a strong 2023 2H rebound.

iShares PHLX Semiconductor ETF (SOXX) — an ETF which we mentioned before already some time ago — tracks the closely watched Philadelphia Stock Exchange semiconductor index, looks like one of a very few top picks here. Compared to most semiconductor-focused funds, this ETF has a low expense ratio of 0.35%. Quite expectedly, NVidia (NVDA) is at the top of the holdings list and represents 10% of the fund, making SOXX a relatively compliant and lower-risk play to gain exposure to the emerging AI fable winner, but let’s be cautious: this stock trades at almost 100X its earnings. Therefore, SOXX is a market capitalization-weighted portfolio of the 30 largest semiconductor companies in the U.S. urging us to get involved into it.