Second Quarter 2026: Semiconductor Stocks Surge

Second Quarter 2026:   Semiconductor Stocks Surge  

So far this year we have seen strong equity market performance against a backdrop of uncertainty relating to the Iran war. Oil flows out of the Gulf dramatically slowed creating energy price shocks and inflation.  Despite the headwinds, markets have been resilient and hit new all-time highs in many equity indices.  The second quarter brought more good news for semiconductor makers with strong earnings growth and forward earnings guidance.

Most regions of the world saw equities rise during the quarter on the heels of cease-fire announcements with Iran, strong quarterly corporate earnings, and healthy consumer spending.  The tech-heavy Nasdaq was the bright spot with a 27.7% climb over the last three months, but it was not the Magnificent 7 propelling the index.  Instead it was the commodity memory chip makers time in the spotlight (Micron, Intel, Broadcom). The Semiconductor Index (SOX) had it best quarter since inception, up 87.8%!

Beside the technology sector, there were other areas of the economy that had good quarterly returns, like industrials, consumer discretionary, and financials. The sector laggard, energy, in 2Q was the sector leader in 1Q due to the oil spike (see Sector Return table below). 

Midway through 2026, we are still holding course on overall asset allocation with no major changes made during the quarter.  As we noted during the first quarter, we made two changes to our investment line-up: 

1. Increased our position in inflation response strategy, which has benefited client portfolios thus far 
2. Lowered our exposure to an active mid-cap manager, favoring the broader index instead

We are still constructive on equity and bond markets this year.  We had the largest IPO ever in the quarter with the debut of SpaceX stock and more IPOs are on deck including Anthropic, Open AI, and Stripe.  Overall, we believe underlying fundamentals are providing a good foundation for economic growth and stock market returns.  We are keeping a watch on the slowing labor market and heightened inflation.  So far, neither has produced a dip in consumer spending, which represents 2/3rd of our GDP growth.   

Our diversified approach to investing has provided clients with solid compounded returns over time.   We helped our clients navigate uncertain times and kept our focus long-term which allowed portfolios to stay invested during the Trump tariff correction of April 2025 and the more recent Iran war market selloff in March 2026.  Markets rebounded and climbed to new all-time highs after each of those volatile periods, and our clients benefitted.  

In addition, we continue to find value in tax-efficient investing strategies for our clients including municipal bonds, direct indexing, and actively tax loss harvesting.  We believe the combination of diversified portfolios with tax-efficiency can create lasting investment returns.

As always, please reach out to us if you have any questions.