Photo by Mohamed Nohassi on Unsplash

Introduction

Most investors/potential investors of AI hardware-related (semiconductor/computer chip/wafer) stocks restrict their interest to just a few of the largest players but the segment consists of hundreds of companies, big and small, in 7 distinct sub-segments, each with its own unique dynamics and growth trajectories.

What Is A Semiconductor?

According to an edited and abridged version from Wikipedia, a semiconductor is a material that has an electrical conductivity value falling between that of a conductor, such as copper, and an insulator, such as glass. In many cases their conducting properties are altered by introducing impurities (doping) into the crystal structure and when two differently doped regions exist in the same crystal, a semiconductor junction is created. Connecting the two materials causes creation of a depletion region near the boundary, as the free electrons fill the available holes, which, in turn, allows electric current to pass through the junction only in one direction. and is the basis of diodes, transistors, and most modern electronics. 

What Is the Global AI Hardware Market Size and Growth Projections?

The global Artificial Intelligence (AI) hardware market size was valued at approximately $25.1 billion in 2024, with projections indicating a surge to $76.7 billion by 2030 at a compound annual growth rate (CAGR) of 20.5%. Separately, the global AI computer market, estimated at $51.10 billion in 2024, is expected to grow at a CAGR of 34.4% from 2025 to 2030, reaching $281.67 billion by 2030. Within the broader AI is the accelerator market, a robust CAGR of 28.20% is projected, with the market expanding from $20.01 billion in 2024 to $240 billion by 2034.

The 7 MunAiMarkets Model AI Hardware Stock Portfolios

As mentioned in the Introduction the segments are tracked below as to their performances week-ending June 13th and MTD in 7 similarly focused model portfolios along with their constituents.

The first 4 stages are involved in the exclusive production and distribution of semiconductor devices and are referred to as the semiconductor value chain. In addition to the value chain there are 3 other segments and they, too, are highlighted below..

1. The Pure-Play EDA Software Chip Design Model Portfolio: DOWN 0.5% w/e June 13; UP 3.7% MTD
   • Focus: design of complex semiconductor chips using sophisticated electronic design automation (EDA) software.
   • Constituents: Cadence Design Systems (CDNS); and Synopsys (SNPS).
2. The Pure-Play Semiconductor Supplier Model Portfolio: UP 4.4% w/e June 13; UP 9.1% MTD
   • ​​​​​​​Focus: provide essential equipment for manufacturing chips such as lithography machines, etching, test and packaging equipment, automation and inspection systems and production materials such as chemicals, gases, wafers and packaging.
   • Constituents: Applied Materials (AMAT); ASML Holding (ASML); Entegris (ENTG);  KLAC Corp. (KLAC); and Lam Research (LRCX).
3. The Pure-Play Semiconductor Foundries Model Portfolio: UP 1.1% w/e June 13; UP 6.5% MTD
   • ​​​​​​​Focus: factories (called foundries in semiconductor jargon) concentrate all their efforts in the manufacture of chips based on the designs provided by other semiconductor companies.
   • Constituents: GlobalFoundries (GFS); Taiwan Semiconductor (TSM); Tower Semiconductor (TSEM); and United Microelectronics (UMC).
4. The Pure-Play Outsourced Semiconductor Assembly and Test Model Portfolio; UP 3.4% w/e June 13; UP 9.3% MTD
   • Focus: assemble chips into finished semiconductor components, tests for defects and do the very specialized packaging of the chips for shipping.
   • Constituents: Amkor Technology (AMKR) and ASE Technology (ASX). 
5. The MunAiMarkets Pure-Play Fabless Semiconductor Companies Model Portfolio: DOWN 0.6% w/e June 13; UP 3.4% MTD
   • ​​​​​​​Focus: manufacturers design and sell hardware devices and semiconductor chips themselves while outsourcing their fabrication (i.e. are fabless) to a specialized manufacturer.
   • Constituents: Advanced Micro Devices (AMD);  Broadcom (AVGO); Marvell (MRVL); Monolithic Power (MPWR);   Nvidia (NVDA); and Qualcomm (QCOM).
6. The MunAiMarkets Integrated Device Manufacturer (IDM) Model Portfolio: UP 2.0% w/e June 13; UP 9.5% MTD 
   • Focus: companies do everything themselves in house to control the entire production process.
   • Constituents: Analog Devices (ADI); Infineon Technologies (IFNNY); Intel Corp. (INTC). Microchip Technology (MCHP); Micron Technology (MU); NXP Semiconductors (NXPI); STMicroelectronics (STM); and Texas Instruments (TXN). 
7. The MunAiMarkets Pure-Play Quantum Computing Model Portfolio: DOWN 1.8% w/e June 13; UP 1.2% MTD 
   • ​​​​​​​Focus: involved exclusively in the research and development of quantum computers.
   • Constituents: D-Wave Computing (QBTS); IonQ (IONQ); Quantum Computing Inc. (QUBT); and Rigetti Computing (RGTI).

Summary

On average, the 31 constituents in the above 7 Model AI Hardware Stock Portfolios were UP 2.3% week-ending June 13th; UP 6.1% MTD. The iShares Semiconductor ETF (SOXX​​​​​​​), with 35 constituents, in comparison, was UP 1.7% w/e June 13th and is UP 7.8% MTD.

Please note that hyperscalers such as Google's TPU, Amazon's Inferentia and Trainium, Meta's MTIA, and Microsoft's Maia accelerators, are developing and deploying their own proprietary AI chips. This vertical integration strategy aims to optimize costs, enhance performance, and reduce reliance on third-party suppliers, signaling a potential fragmentation of the market and a shift towards more integrated, ecosystem-specific solutions. These hyperscalers are not presented in a portfolio of their own as their operations are not exclusively AI hardware operations but their major contributions to the research, development and deployment of AI chips are hereby acknowledged.

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