Key Points
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The Roundhill Memory ETF is the best pure-play fund for memory chips.
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The iShares Semiconductor ETF offers exposure to memory and AI chipmakers.
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Investors who want greater tech sector diversification and reduced volatility risk should consider the Roundhill Generative AI & Technology ETF.
The memory boom has seen stocks like Micron(NASDAQ: MU) and Sandisk(NASDAQ: SNDK) produce generational returns in a single year. Those two have delivered higher returns in a year than benchmarks like the S&P 500 and Nasdaq Composite have produced in more than a decade.
You don’t have to try to guess which memory stocks will be the next big winners if you load up on the right technology-focused exchange-traded funds (ETFs) instead. These three artificial intelligence ETFs have outperformed the S&P 500 this year and look poised to ride the memory market’s tailwinds even higher.
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Roundhill Memory ETF
The Roundhill Memory ETF(NYSEMKT: DRAM) is the best pure-play ETF for the memory chip boom. It’s small, with only 21 holdings, and highly concentrated. Micron, Samsung(OTC: SSNLF), and SK Hynix(NASDAQ: SKHY) — which between them control 89% of the DRAM market and 98% of the high bandwidth memory (HBM) market — are the top three holdings, and they make up more than 70% of the entire ETF.
Some investors may prefer to buy those three names individually instead of shelling out for the fund’s 0.65% expense ratio, but the Roundhill Memory ETF also contains a bunch of lesser-known memory stocks that operate outside of the U.S.
The fund only started to trade on April 2, but it has already amassed roughly $23 billion in total assets under management. That fast growth is a testament to the high demand for memory stocks and ETFs that offer concentrated exposure to them.
iShares Semiconductor ETF
The iShares Semiconductor ETF(NASDAQ: SOXX) has been around for much longer, with an inception date of July 10, 2001. It offers broader exposure to the entire chip sector, which includes the silicon that goes into everything from smartphones to automobiles to data centers. Naturally, it has been a major beneficiary of the AI trade, and it also has exposure to memory chip stocks.
It comes with a 0.34% expense ratio and slightly more portfolio diversification. Among its 30 holdings, Advanced Micro Devices(NASDAQ: AMD), Micron, and Nvidia(NASDAQ: NVDA) are the top three positions, accounting for around 24% of its value.
While memory chips have become a hot trade, investors shouldn’t sleep on AI chips. Nvidia posted 85% year-over-year revenue growth in its fiscal 2027 first quarter and offered optimistic guidance. A fund like the Roundhill Memory ETF is fully concentrated in memory chips, while the iShares Semiconductor ETF offers more diversification.
You will still need a broader fund like the Vanguard S&P 500 ETF(NYSEMKT: VOO) if you want traditional portfolio diversification, but DRAM and SOXX offer meaningful exposure to memory chips.
Roundhill Generative AI & Technology ETF
The Roundhill Generative AI & Technology ETF(NYSEMKT: CHAT) is the most diversified fund of the bunch. Its more than 40 equity holdings include a mix of memory-chip makers, AI chipmakers, and software companies. Alphabet(NASDAQ: GOOG)(NASDAQ: GOOGL) and neocloud provider Nebius(NASDAQ: NBIS) are two notable top-10 holdings that are not held by the other funds.
This actively managed ETF has an expense ratio of 0.75% and focuses on the entire generative AI sector. Semiconductors are just one part of that equation, so the Roundhill Generative AI & Technology ETF offers exposure to multiple components that make the AI build-out possible.
The fund was launched on May 17, 2023, making it a little more than three years old. It has an annualized return of 44% over the past three years, comfortably breezing past the returns of the S&P 500 and the Nasdaq Composite over that period.
This ETF has delivered the lowest returns of these three funds, but it’s hard to complain about a return exceeding 45% year to date. Moreover, of these three funds, the Roundhill Generative AI & Technology ETF presents the lowest level of risk. Any weakness in the memory chip market will crush the other two funds, but this one has a bit more diversification that should help it withstand such cyclical corrections.
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Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Micron Technology, Nvidia, Vanguard S&P 500 ETF, and iShares Trust-iShares Semiconductor ETF. The Motley Fool has a disclosure policy.