Supply dynamics put iShares Semiconductor ETF (SOXX) in focus after Nvidia's earnings print
Nvidia's most recent earnings came in at 106% year-over-year revenue growth and a 62% net profit margin, numbers that surprised even the biggest bulls on the stock. That print sits at the top of the iShares…
Key takeaways
- Nvidia's most recent earnings posted 106% year-over-year revenue growth and a 62% net profit margin, and it is the largest holding in the iShares Semiconductor ETF (SOXX).
- SOXX's top five holdings—Nvidia, Micron Technology, Advanced Micro Devices, Broadcom, and Marvell Technology—make up nearly 40% of its 30-position portfolio, all drawing from the same data center demand pool.
- Micron's newly announced multi-year customer agreements convert uncertain AI spending into contracted multi-year revenue, giving chipmakers demand visibility beyond a single earnings print.
- Amazon raised its capital expenditure budget from $200 billion to $220 billion, citing higher memory costs, while Microsoft and Meta spend into the same AI build-out.
- SOXX carries a 0.33% expense ratio and has delivered a 27.6% annualized return over the past 15 years across multiple semiconductor cycles.
Nvidia's most recent earnings came in at 106% year-over-year revenue growth and a 62% net profit margin, numbers that surprised even the biggest bulls on the stock. That print sits at the top of the iShares Semiconductor ETF (NASDAQ: SOXX), where Nvidia holds the largest position. The next read is whether Micron Technology's newly announced multi-year customer agreements establish a demand floor that extends the current cycle well past what one quarter's data can confirm.
The numbers behind the setup
Nvidia's GPUs command those margins because demand has consistently outpaced supply. The chipmaker's ascent to becoming the most valuable publicly traded company ran through persistent supply shortages that kept pricing power intact. SOXX's second-largest holding, Micron Technology, posted growth rates that exceeded even Nvidia's over the comparable period. Memory supply is where the physical constraint story has its tightest grip.
The fund's next three largest positions are Advanced Micro Devices, Broadcom, and Marvell Technology. All three draw from the same data center demand pool as Nvidia. Together, the top five make up nearly 40% of SOXX's 30-position portfolio. The remaining holdings are primarily chipmakers and semiconductor equipment providers. That concentration is the point: SOXX is built to carry outsize exposure to the current semiconductor build-out.
What to watch on the demand side
Amazon recently raised its capital expenditure budget from $200 billion to $220 billion. The company cited higher memory costs. Microsoft and Meta Platforms are spending into the same build-out. Across the hyperscaler group, the pattern has been to revise projected expenditures upward as AI costs rise, which sustains the order book for chipmakers past the current quarter.
Micron's multi-year customer agreements are the specific development that changes the read on cyclicality. They convert what had been treated as AI spending that could dry up between cycles into contracted multi-year revenue, giving chipmakers visibility that a single earnings print cannot.
SOXX carries a 0.33% expense ratio across its 30 holdings. Its annualized return over the past 15 years stands at 27.6%, a run that spans multiple semiconductor cycles. The item to watch: whether additional hyperscalers follow Amazon's capex revision upward and whether Micron discloses further detail on the duration of those multi-year agreements.