In recent years, the iShares Semiconductor ETF has been enjoying impressive returns, outperforming the S&P 500 index due to its holdings in the world's leading semiconductor stocks. As the artificial intelligence (AI) industry continues to expand, chip companies like Nvidia (NVDA) and Advanced Micro Devices (AMD) are benefiting from the surge in demand. The iShares Semiconductor ETF, owning every major chip stock, presents an opportunity for investors to capitalize on this trend, especially after its recent stock split.

Nvidia remains at the forefront of the AI revolution, as the company's powerful data center chips play a crucial role in developing advanced AI models. Over the past 18 months alone, Nvidia added a staggering $2.8 trillion to its market capitalization. However, the value created by AI is now extending to other chip companies, including Nvidia's competitor, Advanced Micro Devices.

To provide a simple and diversified investment option for those interested in the chip industry, the iShares Semiconductor ETF, with its recent stock split, has become more accessible to a broader investor base. Previously trading as high as $680 per share, the split has increased the number of shares and reduced the price per share by two-thirds. Currently, one share of the ETF trades at around $254.

The iShares Semiconductor ETF offers exposure to 30 different semiconductor stocks, with its top 5 holdings accounting for 37.8% of the total portfolio value. Broadcom, known for its networking components for data centers, has experienced a considerable increase in AI-related revenue. Nvidia, on the other hand, continues to dominate with its powerful GPUs, and its data center revenue has consistently grown in triple-digit percentages. AMD, while trying to compete in the data center market, already holds a dominant market share in the processor market for AI-enabled personal computers.

Apart from these top holdings, the iShares Semiconductor ETF also includes other critical stocks in the AI industry. Taiwan Semiconductor Manufacturing, responsible for manufacturing half of the world's chips, plays a vital role in supporting both Nvidia and AMD. Micron Technology, a manufacturer of memory and storage chips, contributes to processing AI workloads and powers some of Nvidia's latest GPUs.

Since its inception in 2001, the iShares Semiconductor ETF has delivered a compound annual return of 11.7%. However, over the last 10 years, the ETF has seen a substantial increase in returns, with a compound annual return of 25.3% driven by the growing demand for chips in various segments, including AI. Based on three scenarios, the iShares Semiconductor ETF has the potential to turn an investment of $200,000 into $1 million over time, depending on the projected annual returns of 11.7%, 18.5%, or 25.3%.

As the AI boom continues to fuel the growth of the chip industry, the iShares Semiconductor ETF offers investors an attractive opportunity to gain exposure to this rapidly expanding market. With its diversified portfolio and top holdings in leading chip companies, the ETF has the potential to generate impressive long-term returns.