Finance
Play artificial intelligence with semiconductor ETF: VanEck CEO
Investing in semiconductors may be the most efficient way to play the artificial intelligence boom, according to VanEck’s CEO.
“Semiconductors have become the heart of the AI trade,” Jan van Eck told CNBC’s “ETF Edge” this week.
His firm’s VanEck Semiconductor ETF (SMH), which tracks 25 of the biggest chipmakers in the country, is up 21% this year as of Wednesday’s close. However, SMH has fallen nearly 6% this month, led to the downside by Intel, AMD and On Semiconductor.
The fund’s top holding, Nvidia, has seen its shares surge nearly 70% this year amid soaring demand for its AI processors, but it’s also down 7% since the start of the month.
Van Eck suggests the weakness is temporary. He contends high interest in AI chips could set up the group for more durable returns.
“They have become revalued from being a highly cyclical business with short product lives to part of the growth trade, and they have more recurring revenue, so they can just stay at high profitabilities even despite some of the short-term stuff,” said van Eck.
ETF Action founding partner Mike Akins also sees opportunities for investors. He thinks limited competition for some of the top chipmakers’ products could sustain the group.
“You have a high moat, and they control that pricing point,” he said in the same interview. “Until there’s a situation where competition increases meaningfully in this space, where you can have some pricing pressure, it’s hard to see that trade going away.”
Still, Akins advises investors to pay attention to semiconductor fund flows as a barometer for future performance.
“We often caution our clients to almost think about flows as a contrarian indicator. As flows get really depressed, that’s potentially opportunity to buy, and vice versa. As flows get really extended, it might be time to pare a little bit.”
Omar Marques | Sopa Images | Lightrocket | Getty Images
EToro, a stock brokerage platform that’s been ramping up in crypto, has priced its IPO at $52 a share, as the company prepares to test the market’s appetite for new offerings.
The company had planned to sell shares at $46 to $50 each.
IPOs looked poised for a rebound when President Donald Trump returned to the White House in January after a prolonged drought spurred by rising interest rates and inflationary concerns. CoreWeave’s March debut was a welcome sign for IPO hopefuls such as eToro, online lender Klarna and ticket reseller StubHub.
But tariff uncertainty temporarily stalled those plans. The retail trading platform filed for an initial public offering in March, but shelved plans as rising tariff uncertainty rattled markets. Klarna and StubHub did the same.
EToro’s Nasdaq debut, under ticker symbol ETOR, may indicate whether the public market is ready to take on risk. Digital physical therapy company Hinge Health has started its IPO roadshow, and said in a filing on Tuesday that it plans to raise up to $437 million in its upcoming offering. Also on Tuesday, fintech company Chime filed its prospectus with the SEC.
Founded in 2007 by brothers Yoni and Ronen Assia along with David Ring, eToro competes with the likes of Robinhood and makes money through fees related to trading, including spreads on buy and sell orders, and non-trading activities such as withdrawals and currency conversion.
Net income jumped almost thirteenfold last year to $192.4 million from $15.3 million a year earlier. The company has been ramping up its crypto business, with revenue from cryptoassets more than tripling to over $12 million in 2024. One-quarter of its net trading contribution last year came from crypto, up from 10% the prior year.
This isn’t eToro’s first attempt at going public. In 2022, the company scrapped plans to hit the market through a merger with a special purpose acquisition company (SPAC) during a sharp downturn in equity markets. The deal would have valued the company at more than $10 billion.
CEO Yoni Assia told CNBC early last year that eToro was still aiming for a market debut but “evaluating the right opportunity” as it was building relationships with exchanges, including the Nasdaq.
“We definitely are eyeing the public markets,” he said at the time. “I definitely see us becoming eventually a public company.”
EToro said in its prospectus that BlackRock had expressed interest in buying $100 million in shares at the IPO price. The company said it planned to sell 5 million shares in the offering, with existing investors and executives selling another 5 million.
Underwriters for the deal include Goldman Sachs, Jefferies and UBS.
— CNBC’s Ryan Browne contributed reporting
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