Why PSI is Outperforming Traditional Semiconductor ETFs in 2026

The semiconductor trade has been one of 2026’s defining market stories. However, investors have more options than simply owning the industry’s largest companies. Semiconductor ETFs like the Invesco Semiconductors ETF (PSI) offer a way to gain broader exposure to the chip industry and its growing role in the AI investment cycle. ETF Database shows that as of August 19, PSI gained 131% over the last year, beating the iShares Semiconductor ETF (SOXX) , which gained 112%.

PSI has returned 76.91% year to date, supported by exposure to high-bandwidth memory and semiconductor equipment companies beyond GPU makers. PSI holds 30 underlying securities and has approximately $2.6 billion in assets under management.

PSI takes a different approach to the semiconductor rally. The fund tracks the Dynamic Semiconductor Intellidex Index . The rules-based index selects about 30 U.S. semiconductor companies. It evaluates five factors: price momentum, earnings momentum, quality, management action, and value. The portfolio also rebalances and reconstitutes quarterly.

Rank Holding Ticker Weight Primary Focus 1 Applied Materials, Inc. AMAT 6.34% Fabrication Equipment 2 Micron Technology, Inc. MU 6.08% High-Bandwidth & Flash Memory 3 NVIDIA Corporation NVDA 5.89% GPUs & AI Accelerators 4 Lam Research Corporation LRCX 5.53% Etch & Deposition Equipment 5 KLA Corporation KLAC 5.41% Process Control & Yield Inspection 6 Advanced Micro Devices, Inc. AMD 5.38% CPUs & GPUs 7 Analog Devices, Inc. ADI 5.17% Analog & Mixed-Signal Chips 8 Intel Corporation INTC 4.37% Integrated Design & Foundry 9 Cohu, Inc. COHU 3.51% Semiconductor Test & Handling 10 Onto Innovation, Inc. ONTO 3.46% Process Control & Packaging Inspection

Rather than heavily leaning on a single dominant GPU maker (NVIDIA is weighted at 5.89%), equipment manufacturers (AMAT, LRCX, KLAC, COHU, ONTO) and memory suppliers (MU) make up over 30.3% of the fund’s top 10 holdings.

PSI’s strong performance reflects a combination of momentum and differentiated semiconductor exposure. Its 76.91% year-to-date return underscores how strongly the sector has performed in 2026. However, PSI is not a new AI-themed ETF. The fund launched in 2005, giving its strategy a much longer track record than the current AI boom. Its history also shows the cyclical nature of semiconductor investing. The current AI spending cycle has simply created a favorable environment for PSI’s quantitative approach. That makes PSI particularly interesting in 2026. The fund shows that investors do not need to rely solely on mega-cap stocks to capture the AI growth story, although its concentrated factor exposure comes with added risk.

PSI charges a 0.56% expense ratio and has about $2.6 billion in assets under management. When semiconductor spending rises and earnings expectations improve, PSI can benefit. When momentum fades, however, the same strategy can produce sharp losses. For now, that risk-reward trade-off makes PSI one of the semiconductor ETFs worth watching in 2026.