Easing inflation is boosting semiconductor sales after a not-so-memorable 2023. Also, the rebound in sales is being powered by the ongoing enthusiasm surrounding artificial intelligence (AI), which is driving demand for AI chipsets.

The Semiconductor Industry Association (SIA) reported on Jul 5 that global semiconductor sales totaled $49.1 billion in May, jumping 19.3% year over year. This was also the largest percentage jump in year-over-year sales since April 2022.

Semiconductor sales jumped 4.1% sequentially in May from April’s total of $47.2 billion. John Neuffer, SIA president and CEO, said, “The global semiconductor market has grown on a year-to-year basis during each month of 2024, and year-to-year sales in May increased by the largest percentage since April 2022.”

Neuffer added, “The Americas market experienced particularly strong growth, with a year-to-year sales increase of 43.6%.”

Inflation eased in April and May after increasing in the first quarter. Easing price pressures are once again driving demand.

Also, the ongoing enthusiasm surrounding artificial intelligence is boosting demand for AI chipsets.

NVIDIA Corporation (NVDA) has been a key driver of this transformation, with its stock surging 154.1% year to date and 196.7% over the past year. This rally is driven by the popularity of its graphics processing units (GPUs) and the increasing use of AI chipsets, which are in high demand due to the widespread adoption of the Internet and other digital technologies. This trend is expected to continue well into the future.

3 Best Choices

We have, thus, selected three mutual funds with significant exposure to semiconductor producers. Each of these funds carries a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) and is poised to gain from the favorable 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).

Fidelity Select Semiconductors Portfolio (FSELX Quick QuoteFSELX - Free Report) fund seeks capital appreciation. FSELX normally invests at least 80% of assets in common stocks of companies principally engaged in the design, manufacture, or sale of electronic components (semiconductors, connectors, printed circuit boards and other components); equipment vendors to electronic component manufacturers; electronic component distributors; and electronic instruments and electronic systems vendors.

Fidelity Select Semiconductors Portfolio fund has a track of positive total returns for over 10 years. Specifically, FSELX’s returns over the three and five-year benchmarks are 31% and 40.3%, respectively. FSELX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.67%.

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 (FELIX Quick QuoteFELIX - Free Report) fund 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 fund has a track of positive total returns for over 10 years. Specifically, FELIX’s returns over the three and five-year benchmarks are 29.3% and 39%, respectively. The annual expense ratio of 0.73% is lower than the category average of 1.01%. FELIX has a Zacks Mutual Fund Rank #2.

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 (JNGTX Quick QuoteJNGTX - Free Report) aims for long-term growth of capital and specializes in technology. JNGTX invests 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 8.4% and 20.1%, respectively. The annual expense ratio of 0.80% is lower than the category average of 1%. JNGTX has a Zacks Mutual Fund Rank #2.

To see how this fund performed compared to its category and other #1 or 2 Ranked Mutual Funds, please click here.

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