SMH Stock Surges 32% in a Single Month — Is the Chip Rally Real?

When one ticker begins to handle the heavy lifting for an entire industry, a certain kind of energy takes hold of a market. The VanEck Semiconductor ETF, SMH, has been acting like that ticker for the last month. The fund has gone from a bruised mid-March chart to one of the loudest stories on the trading floor, up about 32% in April alone and closing at $549 on May 7. Most of what you need to know can be found in the 52-week range. $214.19 was the low. $549.88 was the high. the same year on the calendar.

The top holdings of the ETF, which applies an ESG filter to track the 25 biggest US-listed semiconductor companies, resemble a roll call of the AI build-out: Nvidia at about 17%, Taiwan Semiconductor at 10.5%, Broadcom near 8%, Intel at 7%, and AMD just behind. Micron, Qualcomm, KLA, Analog Devices, and Texas Instruments. To hold SMH, clever stock-picking is not necessary. Purchasing the index allows you to ride whatever the chip industry chooses to do in the future. It chose to go nearly straight up for the majority of April.

The catalysts are not enigmatic. Even the most cautious analysts had to describe TSMC’s April 16 report as exceptional, with revenue growth of 40.6% and net income up 58.3%. The management changed its full-year growth guidance from “roughly 30” to “above 30%,” which may seem modest, but keep in mind that TSMC hardly ever raises its own bar in the middle of the year. Following with their own beats and unexpectedly optimistic 2027 commentary were ASML and Lam Research, both of which are essential to TSMC’s machinery. Then, on April 23, Intel’s stock shot up 114% in just one month, shocking everyone and propelling the company back into SMH’s top five holdings after years of being viewed as the underdog.

The story is so bizarre that it’s worth taking a brief break from Intel. The company told the financial press that the stock had been written off for a long time as a warning against missing the AI wave. Then, almost immediately, agentic AI workloads began to require more conventional CPUs once more, and Intel’s foundry division started to resemble a limited resource rather than a money pit. For the first time since the dot-com era, its market capitalization surpassed $400 billion. The speed at which that story changed is almost theatrical. It’s difficult not to question how long-lasting any of these characterizations are as you watch it develop.

Options traders are having a more subdued discussion beneath the rally. The price of SMH has been increasing along with implied volatility, which means that betting on further upside is becoming more expensive. Unusual put activity has been noted in Reddit threads on r/stocks, suggesting that some larger players are covertly hedging. By itself, a smart-money put position does not indicate that the rally is coming to an end. However, it implies that not everyone in the room thinks the next leg up will be as easy as the previous one.

What happens to chip earnings after 2027 is the more general question that no one can really answer. Semiconductors have always been cyclical. AI capital expenditures from companies like Amazon, Alphabet, Meta, and others are real, but they eventually peak. A few years ago, SMH would have looked uncomfortable trading at multiples. It’s not a bubble because of that. It is costly as a result. More cautious investors believe that the rebound has already factored in a lot of positive news and that any decline in AI hardware spending could have dire consequences. However, the trade continues to function for the time being. On the chart, the yellow line continues to rise. Almost without trying, SMH has emerged as the ticker that conveys the entire narrative.