PSI ETF is trading well below its recent peak, highlighting how quickly sentiment has turned in one of 2026’s strongest market themes. The Invesco Semiconductors ETF changed hands at $152.85 on Thursday afternoon, down 19.2% from its 52-week high of $189.24.
The pullback comes after an extraordinary run. From December 31, 2025 through July 6, 2026, PSI returned 102.37%, comfortably ahead of the 66.2% gain posted by a much larger semiconductor ETF peer.
For investors, the core question is no longer whether semiconductors remain a powerful structural growth story. It is whether PSI’s factor-driven approach, which keeps Nvidia at a much smaller weight than cap-weighted rivals, can keep outperforming as the sector enters a more volatile phase.
Key Facts
- PSI traded at $152.85 on Thursday, down $0.62 or 0.40% from the prior close of $153.47.
- The ETF is 19.2% below its 52-week high of $189.24 and 166.5% above its 52-week low of $57.36.
- Assets under management have grown to $3.82 billion, with average daily volume of about 461,000 shares.
- PSI returned 102.37% from December 31, 2025 through July 6, 2026, versus 66.2% for a larger semiconductor ETF competitor.
- The fund charges a 0.56% annual expense ratio and holds roughly 31 to 33 U.S. semiconductor stocks.
PSI ETF
PSI stands out because it is not built like a traditional market-cap-weighted semiconductor fund. Instead of concentrating heavily in the sector’s biggest names, it tracks a rules-based index that ranks U.S. chip companies using factors such as momentum, valuation, quality and management characteristics. That process has produced a portfolio tilted toward equipment makers, memory companies and mid-cap names rather than the largest AI-linked stocks.
The most important portfolio distinction is Nvidia exposure. PSI assigns Nvidia a weight of about 4.29%, far below the roughly 18.41% seen in a cap-weighted semiconductor benchmark. That underweight helped drive outperformance during a period when many semiconductor stocks surged far more than Nvidia. It also means PSI is effectively a different bet on the AI buildout: less focused on the best-known chip designer and more focused on the broader supply chain.
That broader supply chain includes companies such as Applied Materials, KLA, Lam Research, Micron Technology and Advanced Micro Devices. As of July 1, the top five holdings were Applied Materials at 6.87%, KLA at 6.48%, Lam Research at 5.80%, Micron at 5.57% and AMD at 4.98%. Three of those names are semiconductor equipment companies, underscoring PSI’s emphasis on the infrastructure side of the chip cycle.
PSI’s outperformance has been driven less by owning more semiconductors than by owning a different kind of semiconductor portfolio.
Why the portfolio structure matters
PSI’s methodology has clear advantages in a broad-based semiconductor rally. When performance leadership extends beyond a handful of mega-cap names, a factor-based fund can capture stronger gains from equipment, memory and mid-cap stocks that would be smaller positions in cap-weighted ETFs. That dynamic was especially favorable in early 2026, when major AI infrastructure spending lifted large parts of the semiconductor ecosystem.
But the same structure can become a headwind when leadership narrows again. If Nvidia, Broadcom or other mega-caps regain momentum while equipment and memory stocks cool, PSI may lag simpler index funds. The strategy also excludes some major foreign semiconductor exposure, including Taiwan Semiconductor, because its index focuses on U.S. companies.
Implications for Investors
The latest drawdown changes the discussion around PSI. A fund that was once defined by a 100%-plus gain is now also defined by a near-20% correction from its high. That matters because PSI is a concentrated, non-diversified sector vehicle. Its top ten holdings account for about 50.19% of assets, and the portfolio has only around 31 holdings. Investors should treat it as a tactical semiconductor allocation rather than a core broad-market holding.
There are still strong fundamental arguments in its favor. Global semiconductor sales reached $298.5 billion in the first quarter of 2026, up 25% from the fourth quarter of 2025. May sales hit a record $120.6 billion, up 104.1% from a year earlier. Industry forecasts now point to $1.5 trillion in global semiconductor sales in 2026, supported by AI infrastructure demand, memory tightness and rising capital expenditure across the data-center ecosystem.
That demand backdrop directly supports several of PSI’s largest holdings. Capital spending plans from major technology platforms are especially important, because equipment and memory suppliers benefit when AI infrastructure budgets rise. At the same time, investors need to monitor whether those spending plans remain sustainable. If markets begin to doubt the durability of AI capex, a fund like PSI could remain volatile even if industry revenue stays strong.
Cost and liquidity are additional considerations. PSI’s 0.56% fee is higher than many competing semiconductor ETFs, and its average daily volume of roughly 461,000 shares is solid but still lower than the most widely traded alternatives. In volatile markets, those factors can make execution less efficient. Rapid asset growth, with AUM reaching $3.82 billion, also raises questions about how smoothly a factor-driven strategy can rebalance in less liquid mid-cap names.
For investors deciding between semiconductor ETFs, the choice increasingly comes down to portfolio philosophy. Those expecting the AI trade to broaden across equipment, memory and second-tier chip names may still favor PSI. Those expecting mega-cap leaders such as Nvidia to reassert dominance may prefer a cap-weighted product with heavier exposure to the largest names.
The next phase for PSI will likely be shaped by earnings, capital expenditure guidance and whether the semiconductor rally broadens or narrows from here. After a 19.2% retreat from its high, the fund offers a lower entry point, but it remains a high-beta expression of one of the market’s most volatile growth themes.