Semiconductors (SMH) vs 10Y Treasury Yield
SMH (VanEck Semiconductor ETF) tracks 25 of the largest US-listed semiconductor companies. Top holdings: NVDA approximately 20 percent, TSMC ~13 percent, AVGO ~8 percent, AMD ~5 percent.
Also known as: Semiconductors (SMH) (ETF_SMH, semiconductors, semis, chips) · 10Y Treasury Yield (10Y yield, 10 year treasury, TNX)
Why This Comparison Matters
SMH (VanEck Semiconductor ETF) tracks 25 of the largest US-listed semiconductor companies. Top holdings: NVDA approximately 20 percent, TSMC ~13 percent, AVGO ~8 percent, AMD ~5 percent. SMH price approximately $482 (April 2026, near recent highs). The 10-year Treasury yield (FRED DGS10) sits at 4.31 percent. Semiconductors are theoretically longest-duration tech sub-segment due to AI capex growth narratives with long payoff horizons. Rising 10Y yields should pressure SMH through duration framework. The 2024-2026 era has paradoxically broken duration framework: SMH +3x since November 2022 ChatGPT moment despite elevated 10Y range 3.6-5.0 percent. AI capex narrative ($400B+ hyperscaler annual run-rate) overwhelmed duration drag.
The April 2026 Configuration
SMH price approximately $482 (April 2026). 10Y Treasury yield 4.31 percent. NVDA ~20 percent of SMH, TSMC ~13 percent, AVGO ~8 percent, AMD ~5 percent. Combined top 4 ~46 percent of SMH (high concentration).
SMH has rallied substantially in 2024-2026. SMH +3x since November 2022 ChatGPT moment. AI capex narrative drove NVDA +12x peak-to-peak (2023-2025) plus Broadcom, AMD, ARM, ASML, Lam Research, Applied Materials.
NVDA Q3 fiscal 2026 results (released February 2026): revenue +62 percent YoY. Hyperscaler capex on AI infrastructure $400B+ annual run-rate (Microsoft, Meta, Alphabet, Amazon combined).
The combined April 2026 reading: SMH near recent highs despite elevated 10Y. Configuration confirms duration framework reasserts only in absence of major capex narrative. AI capex era (2024-2026) has overwhelmed duration sensitivity.
Forward-looking: NVDA next earnings May 2026 will signal AI capex sustainability. Hyperscaler Q1 2026 earnings (April-May 2026) will signal capex guidance. Sustained $400B+ run-rate supports continued SMH outperformance vs 10Y.
Why Semis Are Most Rate-Sensitive Tech Subsector
Semiconductors are theoretically the longest-duration equity sub-segment within tech. Drivers.
Growth profile: AI capex cycle has 5-15 year payoff horizon. Data center buildout (NVDA, AVGO, AMD) requires multi-year capacity expansion. Foundry capex (TSMC) requires 3-5 year construction timelines.
Multiple expansion: SMH forward P/E approximately 30x (April 2026) vs SPY 22x. Higher multiple reflects longer-duration cash flows.
Capital intensity: semis require substantial capex for fab construction. Higher discount rates compress NPV of future capex returns more than for software companies.
Empirical sensitivity (pre-2024): 100 basis point rise in 10Y yield typically associated with 8-15 percent SMH decline (over 60-90 day windows). Compare to XLK 5-10 percent decline; SPY 3-5 percent decline. Semis 1.5-2x duration sensitivity vs XLK.
2022 hiking cycle illustrated. 10Y rose 1.5 percent to 5.0 percent peak. SMH fell 38 percent peak-to-trough October 2022. Within semis, longest-duration names hit hardest: NVDA -65 percent peak-to-trough; AMD -55 percent. Established memory/legacy names (Intel, Texas Instruments) -30 to -40 percent.
2024-2026 era anomaly: AI capex narrative override. NVDA earnings revisions catalyzed SMH despite elevated 10Y.
Conditional Forward Response (Tail Events)
How 10Y Treasury Yield has historically behaved in the 5 sessions following a top-decile or bottom-decile daily move in Semiconductors (SMH). Computed from 1,237 aligned daily observations ending .
Following these triggers, 10Y Treasury Yield rises 0.71% on average over the next 5 sessions, versus an unconditional baseline of +0.63%. 123 qualifying events; 10Y Treasury Yield closed positive in 54% of them.
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Frequently Asked Questions
What are SMH and the 10Y Treasury yield?+
SMH (VanEck Semiconductor ETF) tracks 25 largest US-listed semiconductor companies. Top holdings: NVDA ~20%, TSMC ~13%, AVGO ~8%, AMD ~5% (top 4 ~46% high concentration). SMH ~$482 April 2026 (near recent highs). 10Y Treasury yield 4.31% April 2026. SMH +3x since November 2022 ChatGPT moment. AI capex narrative drove NVDA +12x peak-to-peak (2023-2025). Hyperscaler capex on AI infrastructure $400B+ annual run-rate (Microsoft, Meta, Alphabet, Amazon). NVDA Q3 fiscal 2026 revenue +62% YoY. SMH AUM ~$25B. SMH realized volatility ~28-40% annualized (vs XLK 18-25%, SPY 13-18%).
Why are semis most rate-sensitive tech subsector?+
Three drivers. Growth profile: AI capex 5-15 year payoff horizon. Data center buildout (NVDA, AVGO, AMD) multi-year. Foundry capex (TSMC) 3-5 year construction. Multiple expansion: SMH forward P/E ~30x (April 2026) vs SPY 22x. Higher multiple reflects longer-duration cash flows. Capital intensity: semis require substantial capex for fab construction. Higher discount rates compress NPV more than software. Pre-2024 empirical: 100bp 10Y rise = 8-15% SMH decline (60-90 day windows). XLK 5-10%; SPY 3-5%. Semis 1.5-2x duration sensitivity vs XLK. 2022 hiking 10Y 1.5% to 5.0%: SMH -38% (NVDA -65%, AMD -55%). 2024-2026 anomaly: AI capex override.
What is the AI capex boom?+
Largest tech investment cycle since dot-com era. Hyperscaler capex (top 4): Microsoft $80B+ FY26 (vs $50B FY24); Meta $60-65B 2026 (vs $40B 2024); Alphabet $75-80B 2026 (vs $50B 2024); Amazon $100B+ 2026 (vs $48B 2023). Combined ~$315-325B run-rate, up from $200B (2022). Plus Tesla, Apple, Oracle add ~$80B+. Total US AI capex ~$400B+ annual run-rate. Semi beneficiaries: NVDA H100/H200/Blackwell GPUs dominate AI training (revenue +62% YoY); AVGO networking + custom AI chips; AMD MI300 GPUs; TSMC foundry to all advanced AI chips; ASML EUV lithography monopoly ($200-400M per machine); Applied Materials, Lam Research fab equipment; Micron, SK Hynix HBM for AI accelerators.
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