Three Technology Mutual Funds Worth Considering for AI and Semiconductor Exposure

The technology sector is poised for substantial long-term appreciation as three major catalysts converge: accelerating artificial intelligence deployment, expanding cloud infrastructure investments, and a revitalizing semiconductor industry. For investors seeking exposure to these trends, selecting the right mutual funds becomes crucial.

Why Now? The Perfect Storm of Tech Tailwinds

AI’s Explosive Growth Trajectory

Artificial intelligence is reshaping how enterprises operate and generate value. The AI market is projected to balloon from $243.7 billion in 2025 to $826.7 billion by 2030—a compound annual growth rate of 27.67%. This isn’t speculative; major corporations are already embedding AI across operations. Goldman Sachs forecasts that cloud computing revenues will reach $2 trillion by 2030, primarily driven by enterprise adoption of AI-powered infrastructure.

Semiconductor Momentum Accelerates

The semiconductor industry has entered a sustained recovery phase. According to the Semiconductor Industry Association, global chip sales climbed 19.1% in 2024, with predictions pointing toward double-digit growth extending into 2025. This surge reflects sustained demand from data centers, automotive electrification, and consumer electronics—segments unlikely to decelerate soon.

The Macro Backdrop Favors Tech Equities

The Federal Reserve has held interest rates steady without signaling near-term increases. For technology stocks—where valuation hinges on future cash flows—stable rates represent a meaningful tailwind. Rising borrowing costs historically pressure tech valuations; the current environment removes that headwind.

The Three Funds: A Deep Dive Comparison

Fidelity Select Semiconductors Portfolio (FSELX)

FSELX concentrates specifically on semiconductor design, manufacturing, and equipment companies—the purest play on chip-cycle recovery. Adam Benjamin, who assumed lead management in March 2020, deploys fundamental analysis to identify opportunities. The portfolio’s largest holdings as of November 2024 included NVIDIA Corp. (24.8%), Broadcom Inc. (6.5%), and ON Semiconductor Corp (6.4%).

Performance metrics are compelling: the fund delivered 24.5% returns over three years and 31.2% over five years. With an annual expense ratio of just 0.63%, FSELX ranks among the lowest-cost options in its category. The fund carries a Zacks Mutual Fund Rank #1 designation.

DWS Science and Technology Fund (KTCAX)

KTCAX takes a broader technology sector approach, investing across science and technology companies while maintaining flexibility to emphasize specific industry subsectors as opportunities arise. Sebastian P. Werner has guided the fund since December 2017. As of October 2024, leading positions included NVIDIA Corp. (10%), Apple Inc. (8.6%), and Microsoft Corp. (8.5%).

Three-year and five-year annualized returns reached 16.5% and 20%, respectively. The expense ratio of 0.87% remains below category average. KTCAX also holds a Zacks Mutual Fund Rank #1 rating.

T. Rowe Price Science and Technology Fund (PRSCX)

PRSCX pursues long-term capital appreciation through stocks of companies positioned to capitalize on scientific and technological advancement. Anthony Wang became lead manager in October 2023. The fund maintains a diversified portfolio that includes international stocks, futures, and options strategies. Top holdings as of September 2024 were Apple Inc. (9.5%), Meta Platforms, Inc. (9.2%), and NVIDIA Corp. (6.9%).

The fund generated 14.7% returns over three years and 16.6% over five years, with an expense ratio of 0.79%. PRSCX received a Zacks Mutual Fund Rank #1.

The Investment Case

All three funds share common strengths: Zacks #1 rankings, positive multi-year return histories, competitive expense ratios averaging below the category standard, and minimum initial investments of $5,000 or less. The choice between them depends on your conviction level: pursue maximum semiconductor upside with FSELX, maintain diversified tech exposure through KTCAX, or blend multiple trends with PRSCX. Each offers a disciplined entry point into sectors positioned for sustained expansion.