Retail investors have increasingly shown a preference for semiconductor exchange-traded funds (ETFs) over cryptocurrency options in 2026, establishing the former as the standout investment choice. Since January 2025, semiconductor funds have attracted approximately $3.2 billion in net retail buying, reflecting a dramatic rise in retail investment activity. Data from J.P. Morgan, cited in The Kobeissi Letter, reveals that retail buying has more than doubled in 2026, signaling a significant shift toward artificial intelligence (AI) equities.
This momentum is fueled by what analysts are dubbing the AI capex supercycle. Key players in the tech industry—such as Microsoft, Amazon, Alphabet, Meta, and Oracle—project capital expenditures in 2026 to range between $600 billion and $720 billion, translating to a year-over-year increase of 36% to 70%. A staggering 75% of this expenditure is earmarked for AI infrastructure, reinforcing the sense of urgency and investment in this emerging sector.
The global semiconductor market is also poised for a substantial boost, with revenues expected to exceed $1.3 trillion in 2026, marking the most significant annual growth seen in two decades. The demand for memory chips remains high, largely due to the resource-intensive nature of AI workloads that require high-bandwidth memory. Companies like Micron, Nvidia, and Taiwan Semiconductor Manufacturing Company (TSMC) are expected to reap the benefits of this demand surge. Advances in liquid cooling and efficiency upgrades have further facilitated large-scale data center constructions, particularly in the United States and Asia.
In a striking contrast, cryptocurrency ETFs have not managed to keep pace with the rapid growth of semiconductor funds. In April 2026 alone, two prominent semiconductor ETFs, the VanEck Semiconductor ETF (SMH) and the iShares Semiconductor ETF (SOXX), collectively received about $5.5 billion in inflows—setting a new record that surpassed the previous high achieved in December 2025. During this same period, the Philadelphia Semiconductor Index (SOX) saw an impressive 38.7% increase. Conversely, Bitcoin (BTC) spot funds garnered around $2 billion in April, while products focused on Ethereum (ETH) displayed weaker or negative performance, illustrating a distinct divergence in investor sentiment between the two asset classes.
The year-to-date performance for many crypto ETFs has been lackluster, with Bitcoin experiencing a roughly 20% drop earlier in April, although it later recovered. This inconsistency raises questions surrounding the sustainability of the crypto market, especially when compared to the semiconductor sector’s robust growth.
Furthermore, retail investors appear to be navigating the market with a cautious yet opportunistic approach. The Direxion Daily Semiconductor Bull 3X ETF (SOXL) and its bearish counterpart (SOXS) reported a combined trading volume of 330 million shares per day, marking a 16-month high. Notably, SOXL’s trading volume accounted for nearly all weekly readings over the past five years, indicating that investors are actively hedging their exposures while simultaneously seeking opportunities for upside.
As earnings reports from hyperscalers approach, they will play a critical role in validating the optimistic AI capex guidance. For now, the semiconductor sector stands tall as the most attractive trade of 2026, as retail investors shift their focus away from cryptocurrencies in favor of this burgeoning technology landscape.
