The Smartest Growth ETF to Buy Right Now -- and It's Up 50% in 2026

The VanEck Semiconductor ETF (NASDAQ: SMH) is down around 20% from its high reached just a month ago. The artificial intelligence (AI) trade has cooled substantially as investors look for tangible positive results from these companies, not just aggressive spending on AI development.

That's what's partially caused Alphabet's and Meta Platforms' stocks to crater over the past few weeks. They've kept their foot on the gas with AI spending as free-cash-flow growth turns negative. Folks seem to be getting nervous about investing in companies that may be getting out over their skis.

Semiconductor stocks have gotten dragged down alongside these names. But that doesn't necessarily mean they're worth avoiding. In fact, if you follow the Warren Buffett mantra to "be greedy when others are fearful," it might actually be the smartest trade to make right now.

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Why investing in semiconductor stocks now is a smart move

The VanEck Semiconductor ETF tracks the MVIS US Listed Semiconductor 25 index. It gives investors exposure to some of the largest companies that design and manufacture the chips powering artificial intelligence and data centers. Top holdings include:

• Nvidia: 21.7%
• Taiwan Semiconductor Manufacturing: 9.5%
• Broadcom:6.7%
• Advanced Micro Devices: 5.4%
• ASML Holdings: 5.1%

The top 10 holdings make up more than 70% of the portfolio, making this a highly concentrated and volatile ETF.

It's that concentration that has undoubtedly helped this portfolio over the past year. But the question now is whether this sector's current growth expectations justify its current valuation and whether those forecasts can be met. If it can, the VanEck Semiconductor ETF becomes an interesting "buy the dip" opportunity. If not, this 20% correction was largely justified.

Money is still moving into this ETF. That could mean investors view this as an opportunity rather than a reason to exit. The larger factor, however, may be that the underlying demand story hasn't really changed. Demand is still easily outstripping supply, and that gives chip companies pricing power for the foreseeable future. That pricing power should be able to sustain earnings growth expectations.

But investors should expect a volatile ride. The market is no longer giving free passes to companies tangentially tied to the AI trade. It wants to see results. If demand remains robust, which seems likely, investors may have an opportunity right now to buy semiconductor stocks on sale.

David Dierking has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML, Advanced Micro Devices, Alphabet, Broadcom, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.