After months of consolidation, the semiconductor sector appears poised for a major breakthrough, reigniting investor interest in this newly market-leading industry. After strong growth in 2023 and the first half of 2024, the semiconductor industry faced challenges mid-year. The sharp sell-off in July, fueled by rising expectations for a rate cut by the Federal Reserve, led to a shift from growth sectors such as semiconductors to more defensive areas such as utilities and industrials.
VanEck Semiconductor ETF NASDAQ: SMXindustry benchmark, fell from an all-time high above $280 and tested crucial support near $200. The sharp drop has fueled fears of a prolonged recession.
However, the sector recovered at the end of 2024 thanks to stellar earnings reports from major holdings such as NVIDIA. NASDAQ: NVDA and Broadcom NASDAQ: AVGO. Since then, SMH has spent several months consolidating within a bullish technical pattern, fluctuating around key moving averages.
Last Friday’s mini-breakout and strong overall market gains suggest a potential revival. Investors are now closely watching ETFs approach critical resistance levels, which could signal the start of a new uptrend.
SMH Specifications Signal Breakthrough
From a technical point of view, the SMH is one of the most attractive installations on the market.
The ETF has formed a narrowing range as its major moving averages move closer together, a pattern often referred to as the rubber band effect.
This setup usually precedes significant directional movement.
A break above $255 followed by $260 would confirm this bullish pattern and open the door for significant upside.
Major holdings drive growth
NVIDIA stock forecast today
$164.15
Growth potential 9.85%Moderate purchase
Based on ratings from 43 analysts
| High forecast | US$200.00 |
|---|---|
| Average forecast | $164.15 |
| Low forecast | $85.00 |
NVIDIA stock forecast details
NVIDIA, SMH’s largest holding with a nearly 20% stake, has become a cornerstone of the semiconductor industry’s growth. After retracing more than 10% from its 52-week high, NVDA regained its 200-day SMA last week, ending the week near session highs on Friday.
Shares are now just 5.5% off their 52-week peak, supported by strong fundamentals and positive sentiment ahead of CES 2025, where the company will deliver a keynote address. Analysts remain bullish on NVIDIA, giving the company a Moderate Buy rating with a consensus price target suggesting 14% upside. With its leadership in artificial intelligence and advanced chip technologies, NVIDIA’s performance is critical to the broader sector prospects.
Taiwan semiconductor manufacturing New York Stock Exchange: TSMETF’s second-largest holding is also showing bullish signals.
Shares are trading less than 2% below their all-time high and are approaching a breakout above $210, which would mark the end of the consolidation phase.
As the primary manufacturer of NVIDIA Blackwell’s sought-after chips, TSM is uniquely positioned to benefit from the growing demand for AI-driven semiconductors.
Analysts share a positive outlook for the company’s shares, recommending them as a “moderate buy” and predicting continued growth.
Broadcom stock forecast today
$221.88
-6.15% MinusModerate purchase
Based on ratings from 26 analysts
| High forecast | $265.00 |
|---|---|
| Average forecast | $221.88 |
| Low forecast | US$170.00 |
Broadcom Stock Forecast Details
Broadcom, SMH’s third-largest holding, maintained its growth trajectory, consolidating near all-time highs after its stunning earnings report in December.
The company’s sustained growth and operational efficiency have strengthened its position as a key player in the industry.
Broadcom’s results add to the bullish tone for SMH and highlight the resilience of the sector.
Analysts currently rate Broadcom a Moderate Buy, reflecting confidence in its strong fundamentals and market position. Investors are closely watching the company’s next strategic moves in 2025.
Bottom line
The semiconductor sector appears poised for a renewed rally and breakout, with the VanEck Semiconductor ETF approaching key resistance levels and showing strong technical setup. Months of consolidation, improving sentiment and strong performances from leading holdings such as NVIDIA, Taiwan Semiconductor Manufacturing and Broadcom point to the potential for a significant breakout and comeback in the sector.
Investors should focus on the sector’s favorable position and building bullish momentum in its top holdings. As semiconductor manufacturing gains momentum, the sector could present an attractive opportunity for those looking to capitalize on its growth potential and technical sophistication. The coming days and weeks will be decisive in shaping the next stage of the company’s activities in the market.
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