The semiconductor industry had an exceptional run in 2025, powered by robust microchip demand and the continued excitement around artificial intelligence. Over the past two years, AI—particularly generative AI—has been a major force behind rising chip sales, helping lift the broader market.
A spate of deals announced lately by AI-focused companies further demonstrates investor confidence in semiconductor stocks, which have played a central role in powering the AI revolution. With sales climbing steadily this year and companies pouring billions into AI, the outlook for 2026 looks even brighter.
Given the positive momentum, investing in mutual funds that focus on semiconductors — such as T. Rowe Price Science & Tech PRSCX, DWS Science and Technology A KTCAX and Fidelity Select Technology Portfolio FSPTX — could be a strategic investment move.
The Semiconductor Industry Association (SIA) reported last week that global chip sales hit $72.7 billion in October, growing 4.7% month over month and jumping a solid 27.2% from $57.2 billion recorded in October 2024.
John Neuffer, SIA president and CEO, said, “Global semiconductor sales continued to increase in October, topping September’s results and far outpacing October of last year. Growth continues to be driven by sales into the Americas and Asia Pacific.”
“Meanwhile, the 2025 WSTS autumn forecast calls for record-breaking global market growth in 2025, with sales projected to approach $1 trillion in 2026,” Neuffer added.
This follows a strong third quarter, when global semiconductor revenues reached $208.4 billion, up 15.8% from the prior quarter. The optimism surrounding AI has been the main catalyst for the semiconductor industry’s growth.
Tech giants have been betting heavily on AI and crediting it for their rising revenues. Companies like Amazon AMZN and Microsoft MSFT have recently entered major AI deals expected to push chip demand even higher.
Last month, Amazon reached a $38 billion deal with OpenAI, enabling the ChatGPT maker to expand using AWS cloud infrastructure — and millions of NVIDIA Corporation NVDA GPUs. NVIDIA also granted Microsoft access to its GB300 GPUs through a $9.7 billion agreement involving data center operator IREN Limited IREN.
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).
T. Rowe Price Science & Tech fund seeks to invest in long-term capital growth by investing at least 80% of net assets in common stocks of companies expected by T. Rowe Price to benefit from the development, advancement, and use of science and technology. While most of PRSCX’s assets are invested in U.S. common stocks, other securities may also be purchased, including foreign stocks, futures, and options, in keeping with the fund’s objectives.
T. Rowe Price Science & Tech has a track record of positive total returns for over 10 years. Specifically, PRSCX’s returns over the three and five-year benchmarks are 42.8% and 17.9%, respectively. PRSCX’s annual expense ratio of 0.81% is lower than the category average of 1.05%. PRSCX 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.
DWS Science and Technology A fund seeks growth of capital. Under normal circumstances, KTCAX invests at least 80% of its net assets in common stocks of U.S. companies in the technology sector.
DWS Science and Technology A fund has a track record of positive total returns for over 10 years. Specifically, KTCAX’s returns over the three and five-year benchmarks are 39.9% and 20.4%, 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 the category average of 1.03%.
To see how this fund performed compared to its category and other #1 or 2 Ranked Mutual Funds, please click here.
Fidelity Select Technology Portfolio fund seeks capital appreciation by investing most of its assets in common stocks of companies principally engaged in offering, using, or developing products, processes, or services that will provide or benefit significantly from technological advances and improvements.
Specifically, Fidelity Select Technology Portfolio’s returns over the three and five-year benchmarks are 39.3% and 21.1%, respectively. FSPTX carries a Zacks Mutual Fund Rank #1 and has an annual expense ratio of 0.62%, which is lower than the category average.
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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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
IREN Limited (IREN) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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