Semiconductor ETFs Dominate 2026 as Retail Investors Shift from Crypto

Retail investors are increasingly favoring semiconductor exchange-traded funds (ETFs) in 2026, marking a clear shift away from crypto ETFs. Since January 2025, chip-focused funds have attracted approximately $3.2 billion in net retail inflows, according to data cited by The Kobeissi Letter from J.P. Morgan. This surge highlights a growing structural pivot toward artificial intelligence (AI) equities, with retail participation more than doubling in 2026 alone.

The momentum behind semiconductor ETFs is largely driven by the accelerating AI boom. Major tech companies such as Microsoft, Amazon, Alphabet, Meta, and Oracle have projected combined capital expenditures between $600 billion and $720 billion for 2026. This represents a year-over-year increase of 36% to 70%, with nearly 75% of that spending directed toward AI infrastructure. As a result, global semiconductor revenue is expected to exceed $1.3 trillion in 2026, marking the largest annual growth in over two decades.

Demand for high-performance chips, particularly high-bandwidth memory used in AI workloads, continues to outpace supply. Industry leaders like Nvidia, Micron, and Taiwan Semiconductor Manufacturing Company (TSMC) are well-positioned to benefit from this imbalance. Additionally, innovations such as liquid cooling and improved energy efficiency are enabling the construction of larger data centers across key regions like the United States and Asia.

In April 2026 alone, semiconductor ETFs such as the VanEck Semiconductor ETF (SMH) and the iShares Semiconductor ETF (SOXX) recorded a combined $5.5 billion in inflows, setting a new monthly record. Over the same period, the Philadelphia Semiconductor Index (SOX) surged by nearly 39%, reinforcing the sector’s dominance.

Meanwhile, crypto ETFs have struggled to keep pace. Bitcoin ETFs attracted around $2 billion in April, while Ethereum-based products saw weaker or even negative flows. Year-to-date performance for many crypto funds remains flat or declining, with Bitcoin experiencing a sharp 20% drop earlier in the month before partially recovering.

Despite strong inflows into semiconductor ETFs, trading activity suggests a degree of caution. Leveraged products like the Direxion Daily Semiconductor Bull 3X ETF (SOXL) and its bearish counterpart (SOXS) have seen elevated trading volumes, indicating that investors are both chasing gains and hedging risks. With hyperscaler earnings reports approaching, the sustainability of AI-driven growth will be closely monitored. For now, semiconductor ETFs remain the standout trade of 2026, outshining crypto investments.