Stocks Strategy - AI and Infrastructure

Month May of no opinions, just math. Monthly execution log of US public equities investment strategy

FICH Public Equities is a systematic, long-only investment strategy that trades exclusively within the S&P 500 universe. The algorithm evaluates relative strength every month and automatically rotates capital into the 10 most dominant stocks, maximizing exposure to leading macro trends while completely removing human bias.

Annual Returns - Fich Strategy vs SPY

1. Macro Overview

Over the past 30 days, major U.S. equity indexes advanced modestly, with the S&P 500 up roughly 5% amid resilient corporate earnings and continued strength in artificial intelligence-driven spending. Treasury yields rose noticeably, with the 10-year note climbing toward 4.6% and the 30-year exceeding 5.1% at points, pressuring longer-duration assets.

Capital flows concentrated in technology, supported by strong results from leaders like NVIDIA that reinforced ongoing AI momentum, alongside solid gains in industrials and materials tied to infrastructure and data-center demand. Energy was mixed amid elevated but volatile oil prices linked to geopolitical tensions, while defensive areas such as healthcare and consumer staples lagged.

Momentum-driven positioning favored information technology and industrials, where positive earnings surprises and AI/infrastructure tailwinds reinforced trends, extending sector leadership even as the broader market consolidated after April’s sharp rally.

Weaker momentum and relative underperformance led to trims or avoidance in areas such as financials and some healthcare names. Higher yields weighed on rate-sensitive sectors like real estate and utilities, contributing to outflows as capital rotated toward higher-conviction growth and cyclical themes.

Fich Monthly Returns (2012 – present)

2. The Portfolio: Current Holdings (May 2026)

This curated portfolio is positioned at the intersection of three powerful secular tailwinds—accelerating AI compute demand, a global telecom infrastructure overhaul, and the rise of programmable molecular medicine—anchored by market leaders that supply the essential “picks and shovels” of the modern digital economy. The most important signal across the technology complex is the continued surge in data creation and model training requirements, which is intensifying investment in high-performance semiconductor design, advanced materials, and the hardware stack needed to move, store, and process information at scale. As hyperscale cloud providers expand capacity, the portfolio’s exposure to high-bandwidth optical networking, specialty glass substrates, and next-generation storage (both solid-state and hard-disk) is geared to benefit from sustained capex cycles focused on throughput, energy efficiency, and reliability. Supporting this buildout are critical enablers of advanced manufacturing—automated semiconductor testing and precision laser instrumentation—which tend to see demand as chip complexity rises and production tolerances tighten. Complementing the digital infrastructure theme, the healthcare allocation targets asymmetric upside from the maturation of mRNA platform therapeutics, where progress in programmable medicines continues to expand beyond initial applications and could reshape development timelines and therapeutic breadth over time.

Portfolio Breakdown

WDC (Western Digital) — Weight: 14.49% delivered strong Q3 FY2026 performance with revenue of $3.34 billion, up 45% year-over-year, and non-GAAP EPS of $2.72, beating estimates. Gross margins approached 50–51%, supported by robust demand for HDDs and SSDs in AI infrastructure and data centers. The company highlighted increasing focus on scale, economics, reliability, and sustainability in AI planning, while advancing post-quantum cryptography hard drives for secure AI data. Recent customer surveys and recognition in sustainable AI indices underscore its positioning; Q4 guidance points to continued double-digit growth and margin expansion.

MRNA (Moderna) — Weight: 13.75% reported Q1 2026 revenue of approximately $389–400 million, up substantially year-over-year, with a GAAP net loss that included a significant one-time litigation settlement charge; adjusted performance beat expectations on the top line. The majority of revenue is now from international markets, particularly the UK, as the company diversifies beyond COVID-19 vaccines. Management reiterated expectations for approximately 10% revenue growth in 2026, driven by its broader mRNA pipeline in respiratory and other therapeutic areas, while maintaining a strong cash position exceeding $7 billion. Pipeline progress in oncology and other programs remains a key focus.

MU (Micron Technology) — Weight: 13.12% recorded exceptional results in FY2026, with Q2 revenue reaching a record $23.86 billion (nearly tripling year-over-year) and non-GAAP EPS of $12.20, substantially ahead of estimates. Strong execution in high-bandwidth memory (HBM) and DRAM, coupled with tight industry supply and surging AI demand, drove record gross margins, EPS, and free cash flow. Management highlighted memory as a strategic asset in the AI era, with significant investments in manufacturing capacity. Guidance remains robust, expecting further records in subsequent quarters amid a rapidly expanding HBM total addressable market.

STX (Seagate Technology) — Weight: 11.00% generated robust FY2026 results, with Q3 revenue of $3.11 billion (up 44% year-over-year) and non-GAAP EPS of $4.10, exceeding expectations. Strong demand for mass-capacity storage in AI and cloud environments drove record exabyte shipments and gross margins exceeding 40%. The company has transformed its financial profile through disciplined execution, with ongoing capital returns via dividends. Management anticipates sustained momentum in data storage solutions as AI workloads scale, with Q4 guidance supporting continued growth.

COHR (Coherent) — Weight: 9.67% reported Q3 FY2026 revenue of $1.81 billion, up 21% year-over-year (27% on a pro forma basis), with non-GAAP gross margin of 39.6% and non-GAAP EPS of $1.41. Growth was propelled by scaling AI datacenter infrastructure and communications demand, which now accounts for the majority of revenue. Margin expansion reflects improved product mix and operational leverage in photonics and laser solutions critical for optical networking and high-performance computing. The company continues to see extended demand visibility into 2028, supporting further upside in datacom and industrial applications.

GLW (Corning) — Weight: 9.65% delivered strong Q1 2026 core sales of $4.35 billion (up 18% year-over-year) and core EPS of $0.70 (up 30%), driven by robust demand for Gen AI-related optical products and the ramp of new solar offerings. Optical Communications and Solar segments led growth, supporting gross margin expansion to 37%. The company upgraded its Springboard growth plan, targeting significantly higher annualized sales run rates by 2028–2030 through AI fiber optics, advanced glass, and solar. Q2 guidance projects core sales of approximately $4.6 billion and core EPS of $0.73–$0.77, despite temporary production impacts from solar facility upgrades.

CIEN (Ciena) — Weight: 8.86% achieved record Q1 FY2026 revenue of $1.43 billion, up 33% year-over-year, with adjusted EPS of $1.35, significantly beating consensus. Performance was driven by strong networking demand, with adjusted gross margin at 44.7%. The company raised full-year FY2026 revenue guidance to $5.9–$6.3 billion, reflecting confidence in sustained growth across its portfolio amid expanding bandwidth needs. Q2 revenue is expected around $1.5 billion, with ongoing margin stability.

SNDK (SanDisk) — Weight: 7.90% has experienced dramatic share price appreciation, up over 500% year-to-date and thousands of percent over the trailing year, fueled by explosive AI-driven demand for memory and storage solutions in data centers. The company reported solid sequential revenue growth in recent quarters, with strong performance in NAND and related products benefiting from industry-wide memory shortages and high-bandwidth memory dynamics. Analyst price targets have been repeatedly raised (e.g., to $2,000+ levels by multiple firms), citing its central role in the AI infrastructure buildout. Recent earnings showed continued momentum, though volatility remains elevated given the rapid run-up.

LITE (Lumentum Holdings) — Weight: 6.57% reported robust Q3 FY2026 results with net revenue of $808.4 million, up 90% year-over-year, driven by strong demand in AI and cloud datacenters. Non-GAAP gross margin expanded to 47.9% and non-GAAP EPS reached $2.37, reflecting favorable product mix, operational efficiency, and pricing discipline. Components represented 66% of revenue while Systems grew over 121% year-over-year, with laser chips, pump lasers, and scale-across products leading gains. Momentum in co-packaged optics and optical circuit switches supports further earnings power, with Q4 guidance calling for revenue of $960 million to $1.01 billion and non-GAAP EPS of $2.85–$3.05.

TER (Teradyne) — Weight: 5.45% posted record Q1 2026 revenue of $1.282 billion, up 87% year-over-year, with non-GAAP EPS of $2.56. Semiconductor Test, the primary driver, contributed $1.111 billion, reflecting approximately 70% of total revenue tied to AI-related demand in compute and memory. All business groups benefited from AI momentum, resulting in outsized growth across the portfolio. Q2 guidance calls for revenue of $1.15–$1.25 billion and non-GAAP EPS of $1.86–$2.15, with management expecting continued AI-driven strength.

3. Performance and Statistics

Since January 2012, Fich Public Equities investment strategy has systematically compounded a simulated $100,000 starting portfolio into over $9.93 Million, achieving an annualized return (CAGR) of 37.79% while strictly capping the historical maximum drawdown at −33.50%.

Current Portfolio Performance

Equity Curve - Fich vs SPY

DrawDown Curve - Fich vs SPY

Disclaimer: Past performance is not indicative of future results. All strategy performance metrics and stated returns are net of a 0.10% commission fee per trade. For comprehensive historical data and complete execution logs, visit fich.ai.