Hot Semiconductor ETFs Can Keep Surging

Semiconductor stocks and the VanEck Vectors Semiconductor ETF (NYSEArca: SMH) have been among the leaders of the technology sector’s surge and some market observers believe that trend can continue. SMH and the iShares PHLX Semiconductor ETF (NasdaqGM: SOXX) are up an average of 20.5% year-to-date.

Those performances by the big-name semiconductor ETFs top not only the broader market, but the Nasdaq Composite and diversified technology exchange traded funds as well.

“When I think of the semiconductors space, I kind of visualize that five years ago they basically threw a bunch of the spaghetti at the wall to see what would stick. And we’re currently in an environment where a lot of things have stuck,” Stacey Gilbert, head of derivative strategy at Susquehanna, said in an interview with CNBC.

Still, investors could be paying up for future catalysts for semiconductor and broader technology names. If there is a silver lining for the rising valuations on chip stocks it is that some industry observers believe the group’s valuations should not be measured in the traditional sense because of the evolution of the semiconductor business.