These Four Red-Hot ETFs Have Left SPY Trailing In 2026

• USO has more than doubled this year, as surging oil prices due to the war with Iran have contributed to its rally. 
• SOXX has surged more than 78%, while SMH and TQQQ have gained more than 60% and 47%, respectively, in 2026.
• Meanwhile, SPY has gained about 9.6% in 2026.

Even as U.S. stock markets soar to record highs in 2026, the hottest trades of the year have not been broad-market bets.

Instead, investors have been piling into targeted plays, especially around artificial intelligence, semiconductors, and oil-related exposure that have powered certain exchange-traded funds (ETFs) far ahead of the benchmark SPDR S&P 500 ETF Trust (SPY) this year.

Among the standout outperformers are the United States Oil Fund (USO), semiconductor-focused funds iShares Semiconductor ETF (SOXX) and VanEck Semiconductor ETF (SMH), and leveraged tech fund ProShares UltraPro QQQ (TQQQ).

While SPY has gained more than 9% so far in 2026, USO has more than doubled this year. SOXX has surged more than 78%, while SMH and TQQQ have gained more than 60% and 47%, respectively.

Oil Prices Have Surged On Middle East Conflict

USO, which tracks the daily price movements of WTI crude oil, has rallied since the start of the U.S.-Israel’s war against Iran on the back of a rally in oil prices due to the blockade of the critical Strait of Hormuz. The effective shutting down of the critical waterways pressured global energy supplies and contributed to a surge in oil prices.

Crude oil prices spiked to levels close to 2022, while physical crude prices reached near $150 per barrel in April due to the disruptions.

Wall Street analysts expect the price of oil to remain elevated in 2026 even if the U.S. and Iran close on a peace deal. Barclays has said that it expects Brent crude oil to be around $100 for 2026, while the U.S. Energy Information Administration (EIA) projects Brent crude prices to average about $106 per barrel in May and June.

Semiconductors Rally On Massive AI Demand

The iShares Semiconductor ETF and VanEck Semiconductor ETF, which have heavy exposure to AI-linked chipmakers, have significantly outperformed the broader market in 2026 as investor enthusiasm and optimism around AI infrastructure spending continues to accelerate.

Micron Technology (MU) has been one of the standout names in the AI chip rally this year, having surged more than 138% due to the booming demand for high-bandwidth memory chips used in AI servers and Nvidia-powered systems.

MU accounts for 9.51% of SOXX, making the memory-chip giant the fund’s single-largest holding, according to data from Koyfin. The stock accounts for about 6.4% of SMH and 1.2% of TQQQ as per the platform.

Nvidia Corp. (NVDA), whose AI graphics processing units remain central to the global AI infrastructure buildout, has also been a major driver of gains across the semiconductor industry. Strong enterprise spending on AI computing, cloud infrastructure, and hyperscaler data centers has fueled investor optimism around Nvidia and other chipmakers tied to the AI ecosystem, including Advanced Micro Devices (AMD) and Intel Corp. (INTC).

Micron, AMD, Intel, Broadcom (AVGO) and Nvidia together make up nearly 40% of SOXX’s total portfolio weighting. Meanwhile, Nvidia is the largest holding in SMH, accounting for roughly 16.7% of the portfolio, while Taiwan Semiconductor Manufacturing Co. (TSM), Intel, Broadcom and AMD collectively represent more than 30% of the fund’s total weighting.

What’s Retail Saying?

On Stocktwits, retail sentiment around SPY slipped from ‘extremely bullish’ to ‘bullish’ territory over the past 24 hours amid ‘low’ message volumes.

Meanwhile, sentiment around USO and SMH was in the ‘bearish’ territory, while it was in the ‘extremely bearish’ territory for TQQQ and in the ‘neutral’ territory for SOXX.

One user bullish on USO said, “Back in the 140s today,” indicating that the ETF’s price would surge past $140 on Tuesday.

Meanwhile, another user said, “$SOXX yes this can be a bubble but not every stock in the basket is a bubble. You can put on a pair trade. Long $MU short $ARM etc.”

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