Artificial intelligence is fueling a major infrastructure investment cycle in the technology sector. Investors are treating it as a long-term theme, not a passing trend. According to The Motley Fool's 2026 AI Investor Outlook Report, 9 out of 10 existing AI investors plan to maintain or increase AI exposure in the next 12 months. Nearly 62% of surveyed respondents believe companies investing heavily in AI will deliver strong long-term returns.
Hyperscalers are investing heavily in GPUs, advanced logic and memory chips, and networking equipment for AI data centers. Goldman Sachs reports the consensus Wall Street estimate for global AI-related data center capital expenditures in 2026 is $527 billion.
These capital expenditures primarily benefit semiconductor companies, including chip designers, foundries, equipment manufacturers, and memory suppliers. Many of these companies are concentrated within the VanEck Semiconductor ETF (NASDAQ: SMH).
SMH's top five holdings are Nvidia, Taiwan Semiconductor Manufacturing, Broadcom, Micron Technology, and Advanced Micro Devices. Together they account for close to 49.8% of its assets. The top 10 holdings, which also include ASML, Lam Research, KLA, Texas Instruments, and Qualcomm, account for over 73% of total assets.
SMH delivered a roughly 49% gain in 2025, outpacing the 16.4% return of the benchmark S&P 500 index. The ETF has annualized returns of around 30.9% over the past decade, as of Jan. 8, 2026. This compares to the S&P 500's 12.9% annualized return in the same time frame.
Inference workloads are now increasingly driving AI infrastructure. According to Deloitte, inference is expected to account for two-thirds of total AI compute demand by 2026, up from one-third in 2023. Inference workloads are durable and can scale with usage, unlike episodic training workloads.
SMH is currently trading at nearly 33 times trailing-12-month earnings. This is in line with the price-to-earnings multiples of many large-cap tech stocks.
The Motley Fool Stock Advisor analyst team identified what they believe are the 10 best stocks for investors to buy now. VanEck ETF Trust - VanEck Semiconductor ETF was not one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004. If you invested $1,000 at the time of the recommendation, you'd have $487,089. Or when Nvidia made this list on April 15, 2005. If you invested $1,000 at the time of the recommendation, you'd have $1,139,053.
Stock Advisor's total average return is 970%, compared to 197% for the S&P 500.