The semiconductor sector is on fire. While the broader market has spent much of 2026 navigating volatility, the VanEck Semiconductor ETF (NASDAQ: SMH), the most widely followed sector benchmark, has surged over 20% year to date.
The ETF holds many of the largest semiconductor companies listed in the U.S., including NVIDIA (NASDAQ: NVDA), Taiwan Semiconductor (NYSE: TSM), Broadcom (NASDAQ: AVGO), Intel (NASDAQ: INTC), and Lam Research (NASDAQ: LRCX). That performance, at a time when the broader market is just slightly in the green, is a powerful statement about where institutional capital is flowing.
The driving force behind the sector's outperformance is clear. AI infrastructure spending is accelerating, not decelerating. Hyperscalers continue to pour hundreds of billions of dollars into data center buildouts, and semiconductors sit at the foundation of every single one of those investments. Whether it's advanced logic chips, memory, wafer fabrication equipment, or foundry services, demand is outpacing supply across multiple corners of the sector. With that in mind, here are two top SMH holdings that are standing out for their sector strength and outperformance.
Lam Research: The Equipment Giant Up Over 50% YTD
Lam Research is one of the world's leading suppliers of wafer fabrication equipment. The company provides the machinery that semiconductor manufacturers use to etch, deposit, and clean chips during the production process. It's a critical but often overlooked part of the semiconductor supply chain. Every advanced chip that powers an AI data center has passed through equipment made by companies like Lam Research. And as chipmakers push toward ever more advanced nodes and complex architectures like 3D NAND, demand for Lam's tools is accelerating.
The stock has surged over to 50% year to date, from almost $170 at the start of the year to an all-time high of $267.32 on April 13.
The rally and sharp outperformance are supported by strong, improving fundamentals. In its most recent quarterly report for Q2 2026 posted on Jan. 28, Lam posted earnings per share of $1.27, beating the consensus estimate of $1.17, with revenue up 22.1% year over year.
LRCX also has an income component, with a dividend yield of 0.4%.
The company has a 10-year streak of dividend increases and a $10 billion share buyback program, authorized in 2024, signaling confidence in its long-term trajectory.
Institutional ownership stands at an impressive 85%, reflecting deep conviction from the smart money. And over the prior 12 months, institutions have poured over $29 billion into the stock, versus almost $15.5 billion in outflows. Analysts hold a consensus Moderate Buy rating, and with earnings due on April 22, the next catalyst and potential re-pricing of the stock is right around the corner.
Intel: The Turnaround Trade Up 70% YTD
Intel has been generating a ton of headlines recently and experiencing some of the most staggering momentum in the semiconductor sector. The stock is up about 70% year to date, making it one of the strongest performers in the sector and in the S&P 500. The rally has been driven by improving fundamentals and earnings, and a rapid succession of catalysts that have dramatically shifted the market's perception of a company many had previously written off.
But the real story now isn't what got Intel here. It's what comes next. Earnings are due on April 23, and this report carries unusual weight. After such a dramatic run, the market has priced in considerable optimism. Revenue, foundry progress, and AI segment growth will all be under the microscope. Any miss or cautious guidance could create a sharp reaction, given the elevated expectations now built into the stock.
The analyst's picture adds an important layer of context. Despite the stock's surge, the consensus rating on INTC remains Reduce, based on 37 analyst ratings. And the price target of $48.43 implying over 25% downside from current levels. That is one of the sharpest disconnects between price and analyst consensus in the entire sector right now. The market is running well ahead of what most analysts are willing to endorse, pricing in a turnaround that they have yet to fully validate. Earnings on April 23 will go a long way toward resolving that debate one way or the other.
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The article "The Semiconductor Sector Is Hitting All-Time Highs: 2 Stocks Leading the Charge" first appeared on MarketBeat.
