MKS Inc

MKS Inc. (MKSI), a semiconductor capital equipment components supplier, was a new position during the second quarter. MKS holds the #1 or #2 share position in products touching approximately 85% of wafer fabrication equipment (WFE) spend. We believe with inventories having normalized, the intensity of MKS's semiconductor revenue is reverting back to historical norms as AI drives WFE spend from approximately $110 billion in 2025 toward $175 billion or more by 2027. We view MKS as a mission-critical supplier at the center of a generational, AI-driven semiconductor equipment upcycle, and we are excited to own it in our portfolio at what we consider an attractive valuation.

MKS, Inc. (MKSI) has been a top contributor for the fifth straight quarter, posting strong 1Q26 results that beat earnings and revenue expectations while raising guidance again. The company is benefiting from the accelerating AI logic and memory capex cycle, with wafer fab equipment and NAND memory demand continuing to grow. Additionally, MKSI announced a $25 million expansion of its Atotech manufacturing site in China, which is expected to strengthen its supply-chain positioning. Overall, the company continues to see strong momentum across each of its segments and remains well-positioned for long-term growth.

MKS (MKSI) is witnessing accelerating growth for its instruments and equipment used in the semiconductor manufacturing process, as supply of semiconductors, most notably memory chips, is tight and plans to increase capacity are in the works. This positions MKS favorably within the booming AI data center construction market, which is driving high revenue and backlog growth for companies in this sector.

U.S.-based MKS Inc. had a record year for wafer fab equipment orders, with double-digit sales across semiconductor, advanced packaging and photonics end markets. The strong demand in these sectors is driven by the AI boom, which has created genuine shortages in advanced computer chips and memory. This positions MKS Inc. favorably for continued growth as the market for these technologies expands.

MKS shares advanced on better sales and profits for the fourth quarter as the semi cap industry is seeing improved orders. MKS is benefiting from growing demand for wafer fab equipment as well as chemistry solutions for AI-related applications. This positions MKS favorably in a market increasingly focused on AI integration, suggesting a strong growth trajectory ahead.

MKS outperformed as investor sentiment continues to warm to an improving semiconductor cycle, as the company’s results once again reflected end markets picking up. We continue to see strong prospects for MKS, and while we trimmed our holdings, this decision was based on higher valuations rather than a lack of confidence in the business's future performance.