A $45 billion semiconductor exchange-traded fund completed its quarterly rebalancing and emerged with AMD as its largest holding, replacing Nvidia at the top of the portfolio. The shift, disclosed in the fund’s latest filings, is mechanical, since index funds rebalance by weight, but it is also a marker of how much the chip trade has changed.
The fund tracks an index that weights semiconductor companies by market value, with caps on any single stock. AMD’s run over the past year lifted its market capitalization relative to Nvidia’s, and after the cap adjustments, AMD took the top slot. Investors in the fund, a popular vehicle for betting on the chip sector, now own more AMD than Nvidia by weight, a reversal from the past two years.
The change tracks the underlying business. AMD’s MI400 family of accelerators has been winning real workloads on the inference side of the AI market, the part of the business where models are served to users rather than trained. Nvidia still dominates training and holds the largest share of AI revenue overall, but AMD has found openings where price-performance matters and where customers want a second source. Analysts said the inference market is growing faster than training, which helps AMD’s relative position.
Custom chips are the other force. The largest cloud companies have been designing their own accelerators, often with help from Broadcom and Marvell, to run their internal workloads and to sell to their own customers. Those chips divert demand from the merchant market that Nvidia and AMD sell into. Analysts said the combination of AMD’s gains and custom-chip adoption is turning the AI accelerator market from a one-company story into a multipolar one.
The fund’s shift does not mean Nvidia is in trouble. Nvidia remains one of the two most valuable companies in the world after Apple’s record-setting week, and its revenue and profit still dwarf AMD’s. What the rebalancing signals is diversification within the semiconductor trade. After two years of betting on a single name, index investors are being forced to spread the bet across AMD and, depending on the index, across Broadcom, Marvell, and the memory makers.
AMD’s climb to the top of the fund is a study in patience. For most of the past decade the company was a distant second to Intel in processors and an afterthought in accelerators, and its stock spent years in the shadow of both rivals. The MI-series accelerators, and the data-center revenue that followed, changed the arithmetic, and the fund’s rebalancing is the latest accounting of that shift.
There is also a mechanical lesson. Quarterly rebalancing means the fund buys and sells based on prices set at a point in time, and the AMD-for-Nvidia swap could prove temporary if the two stocks’ fortunes reverse. Fund managers caution against reading too much into a single rebalance, noting that the weights will move again in three months. The shift is a snapshot of relative performance, not a verdict on either company.
The bigger question is whether AMD can hold the share it has gained. Its software stack, ROCm, has improved and now supports more of the models that enterprises actually run, analysts said, but Nvidia’s CUDA ecosystem remains the default for developers who have written for it for years. AMD’s next accelerators are due in the coming quarters, and the company has said its data-center revenue is growing at a rapid clip as cloud providers add its parts alongside Nvidia’s.
Custom silicon complicates both companies’ math. When a hyperscaler designs its own chip, neither AMD nor Nvidia gets the sale, which is why both have responded by offering their own custom programs. Broadcom, which designs accelerators for Google and Meta, and Marvell, which works with Amazon, have become the quiet beneficiaries of that trend. Their rising weight in semiconductor indexes is a separate but related story, and it suggests the merchant market will not simply return to a two-player game.
For the fund’s investors, the change is mostly invisible: the ETF still holds the same basket of companies, just in different proportions. But the shift has a symbolic dimension. For two years, the semiconductor trade was a bet on Nvidia, and index construction amplified that bet. Now the same mechanical process is telling investors that the AI chip market has more than one winner.
AMD’s executives have said they expect the company’s data-center business to keep growing faster than the market’s, and the company has been adding customers in inference workloads that Nvidia once served by default. Whether that trajectory holds will be decided in the inference deployments of the next few years. For now, the rebalancing is a snapshot, not a verdict: AMD’s climb to the top of one fund’s portfolio says the AI chip market is broader than it was, and Nvidia’s response will determine how long the new order lasts.
