Key Points

The VanEck Semiconductor ETF has delivered an average annualized return of 32 percent over the past 10 years.
With the AI boom still in early stages, it should keep generating market-beating returns for years ahead.

Where will the markets stand in 20 years? It is difficult to make even educated guesses, given how quickly the artificial intelligence computing revolution is altering how organizations operate and how people live. What adds to the challenge is that AI remains in the early phases of its influence.

If placing a few long-term bets, broad exposure through an S&P 500 ETF would make sense. Staying invested in the MarketDesk Focused US Momentum ETF, an actively managed quant fund that targets stocks with strong momentum even in downturns, could also fit.

A few diversifiers would round out the approach, such as a dividend-income fund, an international ETF, and perhaps a value fund. For pure alpha potential, the VanEck Semiconductor ETF stands out as a strong consideration.

This ETF has surpassed the S&P 500, the Nasdaq Composite, and other major tech and growth-oriented ETFs over the past 15 years. It remains well positioned to sustain that edge.

The picks and shovels of the AI gold rush

Semiconductors have benefited most from the AI revolution. These chips serve as essential components that enable AI computing. Without them, hyperscalers building AI infrastructure cannot process the required data and information.

High demand has kept supply tight, which supports margins and prices for chip stocks. Various types of chipmakers contribute to AI tasks, including CPU and GPU producers such as Intel and Nvidia, memory and storage firms such as Micron Technology, chip foundries and equipment makers such as Taiwan Semiconductor Manufacturing and ASML, and networking chip companies such as Broadcom.

As AI computing spreads beyond big tech into smaller firms and across economic sectors, demand should keep rising. New AI innovations will likely require fresh chip solutions and expand the need for semiconductors further.

Company names may shift over the next 20 years, yet semiconductor stocks should stay central to the AI expansion.

VanEck has surpassed the competition

The VanEck Semiconductor ETF has captured this demand through its focused portfolio of semiconductor stocks. Its top holdings include Nvidia, Taiwan Semiconductor, and Broadcom. With only 26 stocks, the fund is highly concentrated and should form just a modest share of an overall portfolio given its short-term volatility.

Over longer periods such as 10 or 20 years, the ETF's gains should outweigh its dips. In the past 10 years it has posted an average annualized return of about 32 percent, outpacing major ETF peers. This year alone it has returned about 58 percent year to date as of late August.

With AI expected to reshape economies over the next decade or more, the concentrated VanEck Semiconductor ETF should continue delivering high long-term returns that beat the broader market.