The semiconductor industry has been on a strong upward trajectory since 2024, and that momentum has carried into 2026. Growing demand for artificial intelligence (AI) technologies has pushed major chipmakers to invest billions of dollars in infrastructure and expansion.
Semiconductor companies have also played a major role in driving the broader stock market rally, helping the S&P 500 and the Nasdaq reach fresh record highs in recent months. In this environment, semiconductor funds such as DWS Science and Technology A KTCAX, Janus Henderson Global Technology and Innovation Fund JNGTX and Fidelity Advisor Semiconductors Fund Class I FELIX stand out as an attractive opportunity.
Semiconductor Sales Continue to Soar
Earlier this week, the Semiconductor Industry Association (SIA) reported that global semiconductor sales reached $298.5 billion during the first quarter of 2026, marking a 25% increase from the previous quarter.
On a year-over-year basis, semiconductor sales climbed sharply in March, reaching $99.5 billion — a 79.2% jump from the $55.5 billion recorded in March 2025. Sales also rose 11.5% from the February levels.
SIA President and CEO John Neuffer said, “Global chip sales remain on track to reach $1 trillion in 2026, with Q1 sales significantly exceeding sales in Q4 2025. Strong sales across the Asia Pacific region, the Americas, and China drove global semiconductor market growth, highlighting broad and robust demand for semiconductors and the countless tech products they enable.”
The solid start to 2026 comes after an impressive 2025, when fourth-quarter semiconductor revenues reached $236.6 billion. Demand for logic and memory chips has remained a key driver behind the sector’s expansion.
Semiconductors are now crucial to a wide range of modern and emerging technologies, including IoT, 6G and AI applications. Increased demand from the automotive sector has also helped lift chip sales. Meanwhile, the rapidly growing AI industry — still considered to be in its early stages — is encouraging major tech companies to continue investing heavily in infrastructure and development.
Investor optimism around semiconductor companies has strengthened as spending on AI infrastructure accelerates. Reuters, citing LSEG data, reported that the semiconductor sub-industry is expected to deliver first-quarter earnings growth of 109.2%, significantly higher than the broader S&P 500 information technology sector’s projected growth of 48.2%.
The ongoing AI infrastructure boom is expected to support long-term growth for the chip industry as well. According to a Deloitte report, the global semiconductor market could generate annual sales of nearly $975 billion this year.
3 Best Choices
We have, thus, selected three mutual funds with significant exposure to semiconductor producers. These funds carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) and are poised to gain from the above factors. Moreover, these funds have encouraging three- and five-year returns. Additionally, the minimum initial investment is within $5000.
We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance but also on the likely future success of the fund.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
DWS Science and Technology A fund seeks growth of capital. Under normal circumstances, KTCAX invests at least 80% of net assets in common stocks of U.S. companies in the technology sector.
DWS Science and Technology A fund has a track of positive total returns for over 10 years. Specifically, KTCAX’s returns over the three and five-year benchmarks are 27% and 13.4%, respectively. DWS Science and Technology A fund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.88, which is lower than its category average of 0.99%.
To see how this fund performed compared to its category and other #1 or 2 Ranked Mutual Funds, please click here.
Janus Henderson Global Technology and Innovation Fund aims for long-term growth of capital and specializes in technology. JNGTX invests at least the majority of its net assets in securities of companies that the portfolio manager believes will benefit significantly from advances or improvements in technology.
Janus Henderson Global Technology and Innovation Fund has a track of positive total returns for over 10 years. Specifically, JNGTX’s returns over the three and five-year benchmarks are 24.9% and 11.5%, respectively. The annual expense ratio of 0.81% is lower than the category average of 0.97%. Janus Henderson Global Technology and Innovation Fund has a Zacks Mutual Fund Rank #1.
To see how this fund performed compared to its category and other #1 or 2 Ranked Mutual Funds, please click here.
Fidelity Advisor Semiconductors Fund Class I seeks capital appreciation. FELIX invests primarily in common stocks. Fidelity Advisor Semiconductors Fund Class I normally invests at least 80% of its assets in securities of companies principally engaged in the design, manufacture, or sale of electronic components; equipment vendors to electronic component manufacturers; electronic component distributors; and electronic instruments and electronic systems vendors.
Fidelity Advisor Semiconductors Fund Class I has a track of positive total returns for over 10 years. Specifically, FELIX’s returns over the three and five-year benchmarks are 41.6% and 29.9%, respectively. The annual expense ratio of 0.69% is lower than the category average of 0.98%. FELIX has a Zacks Mutual Fund Rank #1.
To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
