1 Super Semiconductor ETF That Can Turn $400 a Month into $1 Million, With the Help of Nvidia

Nvidia (NASDAQ: NVDA) pioneered the graphics processing unit (GPU) in 1999 to display computer graphics for gaming and multimedia purposes.

Because GPUs are capable of parallel processing – meaning they can seamlessly perform multiple tasks at the same time – they are also ideal for compute-intensive workloads such as machine learning and artificial intelligence (AI) development. That led Nvidia to design new GPU architectures for data centers, and the semiconductor industry is now at the heart of the AI ​​revolution.

Nvidia CEO Jensen Huang believes data center operators will spend $1 trillion building GPU-based AI infrastructure over the next five years. That’s an incredible financial opportunity, not just for his company, but for the entire semiconductor industry.

The iShares Semiconductor ETF (NASDAQ: SOXX) owns all the leading chip stocks, so investors can get exposure to that trend in a diversified way. This is essentially how the exchange-traded fund (ETF) could turn $400 per month into $1 million over the long term.

All the top chip stocks packed into one fund

The iShares Semiconductor ETF invests in U.S. companies that design, manufacture and distribute chips, especially those poised to benefit from powerful trends like AI. While ETFs can hold hundreds or even thousands of different stocks, the iShares Semiconductor ETF only holds 30, so it is heavily concentrated on its specific theme.

Led by Nvidia, the five largest holdings represent 37.9% of the entire value of the portfolio.

Data source: iShares. Portfolio weights are accurate as of October 14, 2024 and are subject to change.

Nvidia was valued at $360 billion in early 2023. Less than two years later, it is now the second largest company in the world, with a market capitalization of $3.2 trillion. The chip giant is delivering the revenue and profit growth to support its incredible value growth, mainly thanks to sales of its data center GPUs.

In the recent second quarter of 2025 (ended July 28), Nvidia generated $26.3 billion in data center revenue, up a whopping 154% from the same period a year ago. The strong results are likely to continue as the company is about to launch a new generation of GPUs based on the Blackwell architecture. Blackwell GPUs promise an incredible performance boost of up to 30x over Nvidia’s flagship H100 GPU, and Huang recently said demand for them is “insane.”

The story continues

Broadcom also plays a key role in AI data centers. It makes AI accelerators (a type of chip) for large-scale customers, which usually include tech giants Microsoft And Amazon. It also makes Ethernet switches like the Tomahawk 5 and Jericho3-AI, which control how fast data is sent between GPUs and devices.

Advanced Micro Devices has become a direct competitor to Nvidia in the GPU space. It will release its new MI350X data center chip, which is designed to compete directly with the Blackwell series, in the second half of 2025. But AMD also makes neural processors (NPUs) for personal computers, which can handle on-device AI workloads. creating a faster user experience. This could be a big opportunity for the company beyond the data center.

In addition to the top five holdings, the iShares Semiconductor ETF also holds other top AI chip stocks, such as Micron technologywhich delivers memory and storage chips increasingly designed for AI workloads, and Taiwanese semiconductor manufacturingwhich manufactures many of the GPUs designed by Nvidia and AMD.

$400 a month turned into $1 million

The iShares Semiconductor ETF has generated a compound annual return of 11.6% since its inception in 2001. However, compound annual returns have accelerated to 24.5% over the past decade, thanks to the rapid adoption of computer-intensive technologies such as cloud computing, enterprise software and AI.

The table below summarizes the returns an investor could earn with $400 per month over 10 years, 20 years and 30 years, based on three different annual growth rates.

Calculations by author.

The iShares Semiconductor ETF is unlikely to deliver an average annual return of 24.5% over the next thirty years – or even the next ten years. The law of large numbers will eventually lead to a slowdown in growth. Nvidia is currently experiencing this phenomenon. Despite data center revenue growing 154% last quarter, that was a much slower growth rate than the previous quarter, just three months earlier, when data center revenue rose 427%.

But even if the ETF returns to an annual return of 11.6%, that will still be enough to turn $400 per month into $1 million over 30 years. While nothing is guaranteed, that is a more realistic expectation for investors.

Furthermore, ETFs can be very flexible. The iShares Semiconductor ETF will rebalance over time, so new companies will find their way into the top positions as they outperform their peers, supporting further returns.

AI will likely be a game changer for the semiconductor industry in the long term. Goldman Sachs believes technology will add $7 trillion to the global economy over the next decade. If true, it will lead to consistent reinvestment in chips and infrastructure to fuel future growth cycles.

However, there is always a risk that AI will not be able to live up to the hype. Therefore, it is important that investors only purchase the iShares Semiconductor ETF as part of a balanced portfolio.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Anthony Di Pizio has no positions in the stocks mentioned. The Motley Fool holds and recommends Advanced Micro Devices, Amazon, Goldman Sachs Group, Microsoft, Nvidia, Qualcomm, Taiwan Semiconductor Manufacturing, Texas Instruments, and iShares Trust-iShares Semiconductor ETF. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls to Microsoft and short January 2026 $405 calls to Microsoft. The Motley Fool has a disclosure policy.

1 Super Semiconductor ETF That Could Turn $400 a Month into $1 Million, With Help from Nvidia was originally published by The Motley Fool