Semiconductor-focused ETFs are back in the driver's seat, shaking off whatever geopolitical jitters were holding them back and reclaiming their momentum as investors double down on the artificial intelligence trade. It's like the AI party never stopped for chips.

Over the past month, chip-linked funds—particularly the ones with heavy ties to Nvidia Corp (NVDA)—have been running the show on the large-cap ETF performance charts. The standouts include the Invesco PHLX Semiconductor ETF (SOXQ) (up 20%), the GraniteShares 2x Long NVDA Daily ETF (NVDL) (up 15%), and the Direxion Daily NVDA Bull 2X ETF (NVDU) (up 14%).

But it's not just a Nvidia story. Take Marvell Technology Inc (MRVL), which has rocketed more than 46% higher in the past month. That kind of move has a way of supercharging ETFs exposed to it. Case in point: the Direxion Daily MRVL Bull 2X Shares (MRVU) have posted returns of over 100% in the same period. That's proof, if anyone needed it, that leverage and AI hype remain a potent cocktail. A very strong, and very risky, cocktail.

At the center of this whole rally sits the VanEck Semiconductor ETF (SMH), widely considered the sector's benchmark. The fund is up 20% in the past month and 25% year-to-date. That's significantly outpacing the broader market; the S&P 500 has managed only modest gains of 5% in the past month and 3% year-to-date amid a choppy macro backdrop.

If you look at SMH's top holdings, it reads like a who's who of the AI supply chain: Nvidia, Taiwan Semiconductor Manufacturing Company Ltd (TSM), Broadcom Inc (AVGO), Intel Corp (INTC), and Lam Research Corp (LRCX).

AI Spending Fuels Broad-Based Chip Rally

So what's driving this resurgence? One dominant force: accelerating AI infrastructure spending. Hyperscalers keep committing massive capital toward data center expansion, and semiconductors sit right at the heart of that build-out. Demand is surging across the entire value chain—from the advanced GPUs and memory chips to the fabrication equipment and foundry services needed to make them.

This broad-based strength is clearly reflected in the performance of SMH's holdings. Shares of Lam Research have climbed more than 40% year-to-date, supported by strong earnings and rising demand for the wafer fabrication tools that are essential for making next-generation chips. Meanwhile, Intel has staged a dramatic comeback, with its stock up roughly 70% this year as investors bet on a turnaround driven by its foundry expansion and AI ambitions.

For now, the momentum remains firmly on the side of the bulls. As long as AI-driven demand continues to outpace supply, semiconductor ETFs are likely to stay at the forefront of the market. It's proving once again that when it comes to the biggest investing trends, chips aren't just in the game—they're all-in.