From Yahoo Finance: 2025-06-01 15:15:00

Warren Buffett recommends investing in low-cost index funds like the S&P 500, but sector-specific ETFs can offer exposure to high-performing sectors like technology. Over the past decade, technology has outperformed, with the semiconductor sector compounding at a stunning 20% annualized rate. This growth is driven by increasing chip demand in various industries and technological advancements. While the semiconductor sector is cyclical and competitive, consolidation among major players has led to increased margins and profit growth. The iShares Semiconductor ETF’s top holdings include companies like Broadcom, Nvidia, and Texas Instruments.

Despite its cyclical nature, the semiconductor sector is expected to continue outperforming due to technological innovation and increasing chip demand. Long-term trends show growth in the sector, with potential for continued innovation and new markets like AI. The high ROIC of leading chip companies suggests positive returns for semiconductor stocks in the next decade. While the iShares Semiconductor ETF may not repeat past performance, its focus on winners in the industry could lead to long-term growth.

Investors looking for high-growth opportunities may want to explore other stocks identified by the Motley Fool Stock Advisor team. While the iShares Semiconductor ETF may not be on their list, past recommendations like Netflix and Nvidia have yielded impressive returns. Stock Advisor’s total average return significantly outperforms the S&P 500, making it a valuable resource for investors seeking market-beating returns.



Read more at Yahoo Finance: Forget Warren Buffett’s Favorite Index. This Artificial Intelligence ETF Could Potentially Turn Just $500 Per Month Into $156,000 Over 10 Years.