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An Introduction
 

The 26 largest capitalized semiconductor stocks in the 6 segments of the sector, as outlined below, were UP 16.9%, on average, in January. This article describes each sub-segment, the performances of each and that of their constituents in January and the catalysts behind such moves.
 

The Sub-segment Portfolios In Our Model AI Semiconductor Portfolio
 

The first 4 of the 6 sub-portfolios consists of those categories that account for the 4 specific steps in the manufacturing of semiconductors, namely:

1. The design of complex semiconductor chips using sophisticated electronic design automation (EDA) software, i.e. Our Model Pure-Play EDA Software Chip Design Stocks Portfolio;
2. The supply of equipment and material necessary to build and operate a semiconductor foundry, i.e., Our Model  Pure-Play Semiconductor Supplier Stocks Portfolio;
3. The foundries that fabricate the chips based on the designs provided by other semiconductor companies, i.e. Our Model Pure-Play Semiconductor Foundry Stocks Portfolio; and 
4. The companies that assemble chips into finished semiconductor components, test for defects, and provide the specialized packaging necessary for shipping the chips around the world, i.e., Our Model Pure-Play Outsourced Semiconductor Assembly & Test Stocks Portfolio.

The other two categories are those major companies that:

1. Design and sell hardware devices and semiconductor chips themselves while outsourcing their fabrication (i.e., are fabless) to a specialized manufacturer; i.e., Our Model Fabless Semiconductor Stocks Portfolio; and
2. Do everything themselves in-house to control the entire production process from beginning to end, i.e., Our  Model  Integrated Device Manufacturer Stocks Portfolio.

The Performance In January Of Each Sub-segment Portfolio
 

5 of the 6 portfolios advanced in January with only our model Pure-Play EDA Software Chip Design Stocks Portfolio declining. The average increase of the 6 portfolios was 16.9% and below are their performances, in descending order, along with that of their constituents in descending order:

1. Our Model Pure-Play Semiconductor Supplier Stocks Portfolio: UP 25.6% in January
   • Constituent Returns: 
     • Lam Research (LRCX): + 36.4%; ASML Holding (ASML): +33.0%; Applied Materials (AMAT): +25.4%; KLAC Corp. (KLAC): +17.5%
     • Catalysts: 
       • Semiconductor supplier stocks ripped higher in January because the market suddenly priced in a much stronger 2025 equipment‑spending cycle, driven by AI‑related demand, memory‑price recovery, and a broad rebound in wafer‑fab investment.
2. Our Model Pure-Play Outsourced Semiconductor Assembly & Test (OSAT) Stocks Portfolio: UP 21.1% in January
   • Constituent Returns:
     • Amkor Technology (AMKR): +22.4%; ASE Technology (ASX): +17.9%
   • Catalysts: 
     • High Bandwidth Memory (HBM) chip demand from NVIDIA, AMD, and hyperscalers surged, and the market realized that packaging, not wafers, is the constraint, and that re-rated the entire OSAT group.
3. Our Model Pure-Play Semiconductor Foundry Stocks Portfolio: UP 11.5% in January
   • Constituent Returns: 
     • United Microelectronics (UMC): +29.5%; GlobalFoundries (GFS): +20.8%; Tower Semiconductor (TSEM): +14.7%; Taiwan Semiconductor (TSM): +8.8%
   • Catalysts:
     • The market realized in January that the foundry down‑cycle had ended, and that 2025–2026 wafer demand would be structurally stronger than expected, driven by AI, edge compute, and a rebound in consumer silicon.
4. Our Model Fabless Semiconductor Stocks Portfolio: UP 11.0% in January
   • Constituent Returns: 
     • Monolithic Power (MPWR): +24.0%; Advanced Micro Devices (AMD): +10.5%; Nvidia (NVDA): +2.5%;   Broadcom (AVGO): DOWN 4.3%; Marvell (MRVL): DOWN 9.1%; Qualcomm (QCOM): DOWN 11.4%
   • Catalysts: 
     • January’s rally was hyper‑narrow and rewarded only the purest AI plays such as AI GPUs, AI CPUs, AI memory and AI server power and marked the first synchronized recovery in: PCs, smartphones, gaming, industrial, and auto. Those fabless companies that immediately benefitted  were those that are closest to end-demand such as MPWR, AMD, and NVDA;
     • Fabless names like QCOM, AVGO, and MRVL didn’t participate in the January melt‑up because the AI demand boom overwhelmingly benefits data‑center compute first — not connectivity, not RF, not handset silicon, and not merchant networking,
     • In addition, January saw a rotation into high‑growth AI compute and  out of slower‑growth connectivity and handset names such as QCOM, AVGO, and MRVL which all have lower growth, lower operating leverage, land less direct AI exposure so they became funding sources for the NVDA/AMD/MPWR trade.
5. Our Model Integrated Device Manufacturer (IDM) Stocks Portfolio: UP 2.2% in January
   • Constituent Returns:​​​​​​​ 
     • Micron Technology (MU): UP 45.3%; Intel's (INTC): UP 25.9% Texas Instruments  (TXN): UP 24.2%; Microchip Technology (MCHP): UP 19.1%;  Analog Devices (ADI): UP 14.6%; Infineon Technologies (IFNNY): UP 11.4%; STMicroelectronics (STM): UP 7.5%; NXP (NXPI): UP 4.2%
     • Catalysts:
       • Every major semiconductor end‑market segment turned positive at once in January for the first time in two years, but not equally so, and the strength of the rally mapped perfectly to where each IDM sits in the cycle: MU: Memory → early‑cycle → explosive upside; INTC & ADI: Compute → mid‑cycle → strong upside; TXN. ADI, MCHP: Analog → late‑cycle → solid upside; IFNNY, STM, NXPI: Auto/Industrial → late‑late‑cycle → modest upside.
6. Our Model Pure-Play EDA Software Chip Design Stocks Portfolio: DOWN 2.7% in January
   • Constituent Returns: 
     • Synopsys (SNPS): DOWN 1.0%;​​​​​​​; Cadence Design Systems (CDNS): DOWN 5.2% 
   • ​​​​​​​Catalysts:
     • ​​​​​​​the U.S. government instructed EDA firms to halt certain sales to China, which is a meaningful revenue base for both companies and, in addition,
     • investors rotated out of low‑beta software stocks into high‑beta AI hardware stocks such as those in the IDM portfolio above as EDA revenue lags hardware cycles by 6–18 months, so investors saw no immediate AI upside.

Summary
 

The 6 sub-segment portfolios in our model AI Semiconductor Stocks Portfolio were UP 16.9%, on average, in January.

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