Comparing Artificial Intelligence ETFs: iShares Semiconductor (SOXX) vs. Fidelity MSCI Information Technology Index (FTEC)
Published on November 8, 2025
As interest in artificial intelligence (AI) continues to surge among investors, exchange-traded funds (ETFs) focused on technology and semiconductors have gained considerable attention. Two popular ETFs in this space—iShares Semiconductor ETF (SOXX) and Fidelity MSCI Information Technology Index ETF (FTEC)—offer different approaches to accessing AI-related growth opportunities. Here, we explore their distinctions in diversification, cost structure, risk, and performance to help investors make informed choices.
Overview of SOXX and FTEC
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iShares Semiconductor ETF (SOXX)
- Focus: Concentrated exposure to semiconductor stocks
- Number of holdings: Approximately 35 semiconductor companies
- Expense ratio: 0.34%
- Assets under management (AUM): $16.8 billion
- Dividend yield: ~0.5%
- Top holdings: Advanced Micro Devices (AMD), Broadcom, Nvidia
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Fidelity MSCI Information Technology Index ETF (FTEC)
- Focus: Broad U.S. technology sector coverage
- Number of holdings: Around 288 technology and communication services companies
- Expense ratio: 0.08%
- Assets under management (AUM): $17.5 billion
- Dividend yield: ~0.4%
- Top holdings: Nvidia, Microsoft, Apple, Palantir Technologies
Diversification and Sector Exposure
FTEC tracks a broad swath of the U.S. technology sector, including many large-cap tech stocks alongside semiconductor companies. Its portfolio comprises roughly 98% technology firms and 1% communication services, spanning well-established giants like Microsoft and Apple as well as emerging AI-driven software companies such as Palantir. This offers investors diversification across various sub-sectors within tech.
In contrast, SOXX offers a more targeted approach by focusing solely on semiconductor companies, which are foundational to AI development through their production of specialized AI chips. This narrower concentration means heightened exposure to the semiconductor industry’s performance but also increased volatility.
Performance and Risk
Examining the past five years through October 31, 2025:
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1-year return:
- SOXX: 28.64%
- FTEC: 26.99%
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Growth of $1,000 over 5 years:
- SOXX: $2,842
- FTEC: $2,568
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Maximum drawdown (5 years):
- SOXX: -45.75%
- FTEC: -34.95%
These figures indicate that SOXX has delivered slightly higher returns but at the cost of greater volatility and larger peak-to-trough declines. FTEC, with its broader diversification, offers steadier performance with less pronounced drawdowns.
Fees and Costs
FTEC’s expense ratio of 0.08% is significantly lower compared to SOXX’s 0.34%, making it a more cost-effective choice for long-term investors. Although SOXX’s slightly higher yield (0.5% vs. FTEC’s 0.4%) may appeal to income-focused investors, the difference is minimal.
Artificial Intelligence Exposure
Both ETFs provide meaningful exposure to the burgeoning AI market, albeit through different lenses. SOXX’s semiconductor focus aligns with the growing demand for AI-specific chips driven by governmental and commercial upgrades in computing hardware necessary to power AI technologies.
FTEC, meanwhile, includes semiconductor giants like Nvidia and AMD but also covers software companies leveraging AI for business insights and innovation, such as Palantir Technologies—a stock that has gained more than 200% in the past year. This way, FTEC captures broader AI-related growth potential beyond hardware alone.
Final Considerations
For investors seeking a targeted play on the semiconductor industry’s AI-driven growth, SOXX offers concentrated exposure that has historically translated into robust returns, alongside higher volatility.
Alternatively, FTEC presents a compelling option with its broader technology sector reach, lower fees, and diversification across multiple AI-relevant industries. Investors looking for balanced exposure to both hardware and software aspects of AI, coupled with reduced risk, may find FTEC more attractive.
Ultimately, the choice depends on the investor’s risk tolerance, cost sensitivity, and conviction about semiconductors as a singular driver versus the wider tech ecosystem’s role in AI adoption.
For further insights and guidance on ETF investing, readers can consult comprehensive resources tailored to navigating the evolving landscape of technology-focused funds.
Disclosure: The author holds positions in Advanced Micro Devices, Apple, Broadcom, Microsoft, Nvidia, and Palantir Technologies. The information provided here does not constitute investment advice. Investors should conduct their own research or consult with a financial advisor before making investment decisions.
