The PHLX Semiconductor Index just reached its highest level since March 2000, the last time chips were this hot, the dot-com bubble burst six months later. This time, the underlying business is real: AI infrastructure spending is accelerating, hyperscalers are committing hundreds of billions to data centers, and the companies supplying the picks and shovels are printing cash.

The iShares Semiconductor ETF (SOXX) is up 40% in the past month alone and 63% year-to-date, powered by blowout earnings, surging free cash flow, and a Wall Street consensus that the AI spending cycle is still in its early innings. Even noted bear Michael Burry has taken a massive put position against SOXX, a contrarian bet that, so far, is going badly for him.

But buying the ETF gives you the whole basket. Three holdings inside SOXX stand apart right now, one already the most valuable company on earth, one quietly becoming the AI infrastructure play that top mutual funds are buying by the billions, and one that Jim Cramer just compared to Secretariat. Here’s exactly why analysts think each one still has 20% to 35% upside from here and which risk could trip each of them up.

Tuesday, May 6, marked a banner day for semiconductor stocks as the benchmark PHLX Semiconductor Index soared 50% over the previous 25 trading days, its highest level since March 9, 2000, just before the dot-com bubble burst.

Sector funds are going gangbusters. The iShares Semiconductor ETF (SOXX) returned a sparkling 40% over the past month and 63% year-to-date. The fund is surging for several compounding reasons: blowout financial performance from bellwether names like Nvidia (NVDA) and Marvell (MRVL), strong earnings sentiment, and aggressive investment across high-growth categories AI, data centers, cloud computing, and quantum computing chips.

The SOXX ETF now holds more than $32.9 billion in assets and includes some of the biggest winners in tech, among them Broadcom (AVGO), Advanced Micro Devices (AMD), and Micron Technology (MU). Wall Street analysts tracking the sector argue the AI spending cycle is still in its early innings, as hyperscalers, enterprises, and governments continue investing aggressively in AI infrastructure.

Not everyone is on board, however.

Michael Burry of The Big Short fame disclosed via an April 24 Substack post that he purchased “quite a lot” of January 2027 $330 put options on SOXX. In the short term, that bearish bet hasn’t paid off. With SOXX trading at $504 as of May 8, Burry is wagering on a 35% decline from current levels and, as in the old days, almost nobody else is betting with him.

With the wind at its back, investors may wonder how high the sector can fly. Buying the ETF itself offers diversified exposure, but investors seeking potentially outsized returns may want to focus on the three SOXX holdings that appear best positioned for the next phase of the rally.

Nvidia (NVDA)

You may feel like you’re arriving late to the Nvidia party, but the party isn’t over.

The AI chip giant still commands one of the strongest competitive positions in the market. Trading at $216 per share and up 14.5% over the past month, Nvidia remains the dominant supplier of graphics processing units (GPUs) that power generative AI systems and massive cloud-computing workloads. Its chips are now embedded throughout the AI ecosystem, from hyperscaler data centers to enterprise applications. Nvidia is also, by market capitalization, the largest company on earth, valued at $5.17 trillion, and the stock is up roughly 1,300% since 2021.

Cash generation remains exceptional. The company continues to benefit from relentless AI spending by Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOGL), and Meta Platforms (META). Even after years of explosive gains, Nvidia is delivering growth that few mega-cap companies can match: revenues up 250% over three years, net income up more than 300%, and free cash flow up 200% over the same period.

Analyst conviction is high. Bernstein’s David Dai maintains a buy rating with a $300 price target. Across Benchmark, Rosenblatt, and Cantor Fitzgerald, the average target sits at $291.67, implying 35% upside from current levels, according to Benzinga analysis. The primary risk is valuation: Nvidia trades at a significant premium to traditional semiconductor peers. But investors betting on continued AI infrastructure expansion may still see it as the clearest long-term winner in the space.

At 8.40% of SOXX’s portfolio, NVDA is the fund’s largest single holding.

The Chip Sector Just Flashed Its Biggest Warning Signal in 25 Years.

When it hit, expert trader Matt Maley flagged it to his members and made a trade the same afternoon. On Wednesday, May 13, he walks through what he’s holding and how he’s managing risk at these levels. Reserve Your Free Spot

Broadcom (AVGO)

Professional money managers know something many retail investors overlook: Broadcom has quietly become one of the most important AI infrastructure companies on the market.

Industry data show that top-tier mutual funds purchased $10.11 billion in Broadcom stock over the past month, second only to Alphabet ($11.2 billion) among all stocks. That institutional conviction reflects Broadcom’s business model, which combines high-margin semiconductor exposure with recurring software and infrastructure revenue. Its core business is thriving: the company supplies networking chips, custom AI accelerators, and connectivity solutions that power a growing share of global AI data centers.

Some investors were spooked by a recent 4% share-price decline tied to uncertainty around Broadcom’s $18 billion chip-manufacturing partnership with OpenAI. According to insider reports, the project, which requires 1.2 gigawatts of data center capacity, depends on Microsoft (MSFT) buying 40% of the venture’s chip output. As of this writing, Microsoft has not committed, triggering a selloff on May 7.

That pullback looks like noise against the larger signal. Broadcom has returned 103% over the past year and has delivered a 13.1% annualized dividend growth rate, a rare combination of growth and shareholder returns in the technology sector. Beyond the OpenAI deal, Broadcom holds major semiconductor agreements with Alphabet, Meta Platforms (META), and Anthropic.

At 8.27% of SOXX, Broadcom is the fund’s second-largest holding and a compelling option for both growth- and income-oriented investors.

Advanced Micro Devices (AMD)

AMD has spent years transforming itself from a struggling chipmaker into a serious challenger across CPUs, GPUs, and AI accelerators. The turnaround is now undeniable: trading at $433 per share and up roughly 100% year-to-date, AMD has steadily taken market share from Intel (INTC) in PCs and servers while pushing aggressively into the AI chip market.

The company’s MI300 AI accelerator chips have generated growing investor enthusiasm as enterprise customers seek alternatives to Nvidia’s dominant GPU lineup. While Nvidia still controls the majority of the AI accelerator market, AMD has emerged as one of the few companies with the scale, engineering talent, and customer relationships to compete seriously both this year and over the longer term.

“AMD is an emerging leader in AI and data center markets,” Benzinga analysis noted, “with a focus on sustainability and potential for continued growth. However, tight wafer supply may limit near-term upside, and competition from Intel and Nvidia remains a real concern.” Benzinga research also flagged AMD’s diversification as a mitigant: “AMD has a strong presence in aerospace, defense, and automotive industries that could help offset risk and support the company’s stated goal of $100 billion in annual revenue within five years.”

Bernstein analyst Stacy Rasgon reinforced that outlook in a May 6 research note, issuing a market-outperform rating on AMD with a $525 price target, a 20.6% premium to current levels.

The momentum has prompted some dramatic comparisons on Wall Street. “Is AMD the Secretariat of this era???” CNBC’s Jim Cramer wrote on X on May 7, invoking the 1973 Triple Crown winner who took the Belmont Stakes by 31 lengths.

That’s the kind of company and performance worth a second look. At 6.4% of SOXX, AMD is the fund’s third-largest holding and, for investors willing to accept some competitive risk, potentially its highest-upside bet.