The semiconductor trade — the backbone of the AI revolution — just made a decisive move higher.
Both the VanEck Semiconductor ETF $SMH ( ▲ 1.53% ), and the Invesco PHLX Semiconductor ETF $PSI ( ▲ 1.41% ), have officially broken out to new all-time highs.
And when you see broad-based ETFs like these leading the charge, it tells you one thing: this isn’t about one or two names. This is an entire sector firing on all cylinders.
Now layer in what we got overnight.
Taiwan Semiconductor Manufacturing Company $TSM ( ▲ 1.4% ) —the single most important chip manufacturer in the world—just delivered another monster quarter, with $35.6 billion in revenue, 35% year-over-year growth, and record-breaking performance.
That’s not just good. That’s explosive demand.
TSMC sits at the center of everything—AI chips, advanced processors, next-gen computing.
When they’re putting up numbers like this, it confirms what I’ve been saying: we are still early in the AI infrastructure buildout.
This isn’t peak demand. This is acceleration.
The Market Is Starting to Get It
For months, we’ve talked about the “second wave” of AI—not just the obvious mega-cap winners, but the picks and shovels, the companies actually building the infrastructure powering this revolution.
That’s exactly what this breakout is signaling.
Money is rotating deeper into the semiconductor space, breadth is expanding, and leadership is getting stronger—not weaker.
That’s textbook bull market behavior.
And this is where it gets even more interesting. Marvell Technology $MRVL ( ▲ 7.19% ), just hit a new all-time high as well. This is a name I recommended back in mid-December, and it’s playing out exactly as expected.
Why?
Because Marvell sits right in the sweet spot: data center infrastructure, AI networking, and custom silicon solutions.
In other words, it’s not just riding the AI wave—it’s helping build it. And the market is rewarding that positioning in a big way. And it’s not just MRVL.
Teradyne $TER ( ▲ 1.04% ), is also breaking out to new highs—another one we already own in the portfolio. This is a key player in semiconductor testing, which means it benefits directly as chip demand accelerates.
As more advanced chips get produced—especially for AI and data centers—the need for testing only increases. That’s exactly the kind of behind-the-scenes leverage you want exposure to.
And seeing TER confirm the move alongside SMH, PSI, and MRVL is another signal this rally has real strength under the surface.
What This Means Going Forward
Now step back and connect the dots.
Semiconductor ETFs are breaking out, TSMC is delivering record growth, and key names like MRVL and TER are hitting new highs.
This is not a coincidence.
This is institutional money doubling down on AI infrastructure.
Historically, when semiconductors lead like this, the broader market tends to follow.
The rally tends to have legs, and the biggest gains often come after the breakout—not before.
The Bottom Line
We’re seeing a powerful combination right now: strong fundamentals, technical breakouts, and expanding leadership.
That’s exactly the type of setup you want if you’re looking for the next leg higher in this market.
Could we get volatility along the way? Of course. But stepping aside when you see this kind of confirmation—that’s how investors miss the biggest moves.
The semiconductor space isn’t just participating in this bull market…
It’s leading it.
And if that continues—and right now all signs say it will—this breakout could be the start of something much bigger.
Here’s to the future,
Matt McCall
Founder, NXT Wave Research
