Trading on commodity cycles within the technology sector is nothing new, and it’s often associated with peak moments. Semiconductor ETFs like iShares Semiconductor ETF (SOXX) and VanEck Semiconductor ETF (SMH) date back to the 2000/2001 period. For decades, the quarterly 13F filings of hedge funds have also detailed rapid movements into and out of chip stocks as booms and busts proceeded. AI is creating a new level of interest and playing field for this kind of trading, often through ETFs.
There are roughly two dozen broad-based AI ETFs, but increasingly, there are niche trades targeting components from with the AI economy, such as memory — led by the Roundhill Memory ETF (DRAM) — and more recently, ETFs targeting companies in the photonics market, which focuses on AI data center optical networking innovation. There is also a growing AI thematic bet focused on supply and demand in the capacitor market, components that are crucial to stabilizing the intense power demands in data centers.
It’s a trade that Global X — which launched its broad AI ETF, Global X AI & Technology (AIQ), back in 2018 — is planning to launch within a few weeks, according to Pedro Palandrani, Global X head of product research & development, speaking during CNBC’s “ETF Edge” podcast earlier this week. The company has a prospectus on file with the SEC for the Global X MLCC & Electronic Components ETF, though it is currently in a quiet period until the ETF launches.
Palandrani says Global X has positioned its thematic investing ETFs within a concept that the investment manager refers to as “conversational alpha.”
“I always say these are very relatable concerns,” Palandrani told CNBC’s Dominic Chu. “Whether the theme is AI or geopolitics and its impact on defense tech, Global X is working with many financial advisors using these ETFs as a way to have conversations with clients on investing opportunities,” he said.
Palandrani stressed that this doesn’t mean the thematic bets are having a dramatic impact on overall portfolio construction. When it comes to conversational alpha, “they may own two, three, five percent in these thematic portfolios, and that’s looking at a 60-40 [60% stock/40% bond] type of portfolio,” he said.
But he added, “Most of these client conversations are happening on these thematic categories, how the portfolios are positioned to capitalize on those things that may be headlines grabbers. Investors recognize that very well,” he said. “Targeted exposures are top of mind. We will continue to see those targeted exposures within AI,” Palandrani said. “Where we see significant opportunity is offering targeted exposure to many of the bottlenecks within AI,” he added.
The ETF market focus on multilayer ceramic capacitor manufacturers began last month, with the launch of two portfolios in August: the more pure-play Defiance AI Capacitors Leaders ETF (CAPA) and the broader Tema MLCC & PowerSemi ETF (PSOX).
What makes capacitors critical to the AI data center story
CAPA is a bet on the select group of companies, 10 in all, based in Asia that dominate the capacitor market, including TDK, Samsung Electro-Mechanics, Murata, Kyocera, Yageo, Taiyo Yuden, Maruwa, Walsin, Samwha Capacitor and Nippon Chemi-Con.
“Every AI accelerator, server board, and hyperscale data center depends on capacitors and passive components to condition power, regulate voltage, filter signals, suppress noise, and store energy,” Tema stated in its fund overview. It cited data from Murata that “a single AI server built on Nvidia’s GB300 platform can require roughly 30,000 multilayer ceramic capacitors, with a full rack consuming hundreds of thousands of units.“
Murata, which is the largest MLCC manufacturer, has forecast to investors that MLCC shipments will grow at approximately 30% annually through 2030, tripling 2025 levels. Its stock price has risen over 115% year-to-date.
The Murata Manufacturing Co. headquarters, center, in Nagaokakyo, Kyoto Prefecture, Japan, on Tuesday, Feb. 17, 2026. Murata is the world’s largest supplier of multilayer ceramic capacitors, tiny yet essential components that regulate power flow in electronic devices from Apple iPhones to Tesla cars.
Bloomberg | Bloomberg | Getty Images
The Global X MLCC ETF will track the Akros MLCC & Electronic Components Index, which seeks to hold up to 15 companies that are among the largest MLCC manufacturers worldwide or have at least 50% revenue exposure to the component category, according to its prospectus.
Tema’s PSOX ETF targets some of those same capacitor makers, plus companies that focus on other aspects of power regulation within the AI market, including U.S.-based Bloom Energy and Monolithic Power Systems. Both thematic trades, “represent emerging AI bottlenecks,” Tema states in its fund materials.
Roundhill Investments, whose DRAM ETF has been a breakout star this year with close to $25 billion in assets, is planning to get in on the trade as well, through its CCML ETF, also currently in registration with the SEC.
The MLCC ETFs are off to a much slower start than DRAM and other AI trades in terms of attracting investor interest and asset gathering, with CAPA reporting assets of roughly $3.5 million and PSOX not yet at the $1 million mark. The funds have relatively high expense ratios relative to core equity holdings, though in line with what other thematic ETFs charge, with CAPA’s annual expense ratio at 0.75% and PSOX at 0.71%.
Recent press reports on the capacitor market bottleneck have referred to it as “the rice” of the AI buildout story. The CEO for Tokyo-based Taiyo Yuden, whose shares are up over 150% this year, told Bloomberg in June that the company was facing “scary” levels of demand, especially as more advanced chips like Nvidia’s Rubin hit the market.
Performance of Murata shares over the past year.
Palandrani said on “ETF Edge” that its approach to thematic ETFs is about identifying a high conviction area, an investable universe of companies that can be wrapped within the ETF structure, and a long-term investment strategy that can allow allow investors to capitalize on secular, strategic areas where it sees opportunities for the next five to 10 years.
With this week also marking the 50th anniversary of the launch of the index fund by Vanguard, ETF experts noted how far fund investing has come, but also how the risk profile has changed, especially within ETFs which first came to market as a new way to gain exposure to low-cost core index holdings but are now the default structure for many trades.
“We are in the midst of thematic tidal wave of ETFs, particularly centered around AI. Issuers are coming out with any form of an AI play possible,” said Todd Sohn, chief ETF strategist at Baird Strategas. “These thematic booms tend to come in cycles.”
He noted what a big change it is for the market, the “slicing and dicing of these segments” whereas historically ETFs have been about index tracking, broadly diversified vehicles. “You just had to have asset allocation correct and let the market work over time … limited stock knowledge was needed,” he said.
Nate Geraci, president of NovaDius Wealth Management, is cautious on the latest developments. “It’s a tale as old as time in asset management, where fund issuers rush to package and sell whatever is capturing investors’ attention. Nothing is hotter right now than slicing and dicing the AI trade,” he said. “If investors are going to dabble in these products, it’s critical they look under the hood to understand exactly what they own and how it fits with the rest of their portfolio,” he added.
There are both pros and cons to ETFs such as these newer AI portfolios targeting a small group of stocks, according to Sohn. It is a much sharper tool to gain exposure, he said, but the investor really needs to understand the companies much better on an individual basis than a broad-based index fund holder would. “This is particularly important given a few heavyweight names are pushing this story forward,” he added.
For traders who want efficient access to companies powering a certain segment of the AI boom, Sohn says these ETFs can serve a real need: “quick and efficient access to practically any market or theme.” That is especially true of a market like MLCCs where the major players are all listed in Asia.
But for many investors, he advises avoiding fund overlap. “If you own one broad AI ETF and overlay it with one of the niche funds, you may have more exposure to certain bellwethers than you need,” he said.
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