The semiconductor market is staging a solid rebound, thanks to the artificial intelligence (AI) boom, especially generative AI, which has been pushing demand for microchips. Robust demand across various sectors has resulted in sharp revenue gains for semiconductor companies in recent quarters. This surge has helped drive broader market gains, making semiconductors a key player in powering last year’s market upswing.

In light of these favorable developments, investing in mutual funds that focus on semiconductors — such as Janus Henderson Global Technology and Innovation Fund (JNGTX Quick QuoteJNGTX - Free Report) , Fidelity Advisor Semiconductors Fund Class I (FELIX Quick QuoteFELIX - Free Report) and DWS Science and Technology A (KTCAX Quick QuoteKTCAX - Free Report) — could be a strategic investment move.

Semiconductor Sales Continue to Climb

The Semiconductor Industry Association (SIA) reported that global semiconductor sales jumped 3.5% month over month in May, reaching $59 billion from $57 billion in April. On a year-over-year basis, sales jumped 19.8% in May, marking the 12th straight month of annual growth exceeding 17%.

SIA President and CEO John Neuffer said, “Global semiconductor sales remained strong in May, edging above the previous month’s total and remaining well ahead of sales from the same month last year.”

Earlier in the year, semiconductor sales declined marginally as concerns grew over the competitiveness of U.S. tech companies following the launch of the Chinese budget AI model, DeepSeek. However, industry experts soon dismissed the threat by labeling DeepSeek as overly hyped.

Positive Forecast for the Semiconductor Market

May’s robust growth in sales follows an outstanding 2024, during which global semiconductor revenues reached $627.6 billion — a 19.1% jump from $526.8 billion in 2023. The final quarter of 2024 alone saw a 17.1% year-over-year increase, totaling $170.9 billion.

The growth was driven largely by robust demand from data centers and strong contributions from memory chips. With continued investments in AI technologies, the semiconductor sector is expected to maintain strong momentum, with analysts forecasting continued double-digit growth into 2025.

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).

Janus Henderson Global Technology and Innovation Fund 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 23.8% and 16.7%, respectively. The annual expense ratio of 0.78% is lower than the category average of 0.99%. JNGTX 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 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 has a track of positive total returns for over 10 years. Specifically, FELIX’s returns over the three and five-year benchmarks are 26.8% and 29.4%, respectively. The annual expense ratio of 0.69% is lower than the category average of 1.01%. 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.

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 23.3% and 17.6%, 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.

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