What is the difference between SOXX and SMH?

The main difference is weighting: SMH is market-cap weighted (large weight on NVIDIA), while SOXX is nearly equal-weight (no single stock exceeds 8%).

Why is SOXX expected to outperform SMH in 2026?

Due to expected slowing growth for NVIDIA, its large weight in SMH could hurt performance, while SOXX's equal-weight approach mitigates that impact.

Does this mean I should sell SMH and buy SOXX?

No, this is an analysis only, not an investment recommendation. Investors should assess their goals and risk tolerance before making any decisions.

Prediction: SOXX Is About to Outperform SMH in H2 2026

A new analysis from Motley Fool predicts that the iShares PHLX Semiconductor ETF (SOXX) will outperform the VanEck Vectors Semiconductor ETF (SMH) for the remainder of 2026. The key difference lies in their weighting methodologies: SMH is market-cap weighted, giving a large weight to NVIDIA (NVDA), while SOXX is nearly equal-weight.

According to a report from Motley Fool, the iShares PHLX Semiconductor ETF (SOXX) is predicted to outperform the VanEck Vectors Semiconductor ETF (SMH) in the second half of 2026. The main reason is a subtle difference in weighting methodology: SMH uses market-cap weighting, which gives a larger allocation to stocks like NVIDIA (NVDA), while SOXX uses a nearly equal-weight approach that limits any single stock's influence.

Analysis Details

Key Difference Between SOXX and SMH

SMH: Tracks the VanEck Vectors Semiconductor Index, which is market-cap weighted. This means larger companies like NVIDIA (NVDA) have a higher weight. Currently, NVIDIA makes up about 20% of SMH.
SOXX: Tracks the PHLX Semiconductor Index, which is nearly equal-weight. No single stock exceeds 8%, reducing the impact of volatility in any one stock.

Why SOXX Is Expected to Outperform

Analysts believe SOXX's equal-weight approach makes it less vulnerable to sharp moves in individual stocks, especially with expectations of slowing growth for NVIDIA in H2 2026. In contrast, SMH could suffer if NVIDIA's stock declines due to its large weight.

Context

The semiconductor sector has been volatile in 2026, with varying performance across companies. As markets await Q3 results, diversification through SOXX may offer a more stable option for investors.

What This Means for Investors

This analysis does not recommend buying or selling either ETF, but it highlights the importance of understanding weighting methodologies when choosing index ETFs. Investors seeking balanced exposure to the chip sector may prefer SOXX, while others may favor SMH if they bet on continued NVIDIA strength.