Core Insights - The global semiconductor market is projected to grow significantly, with revenues expected to reach $772 billion in 2025, representing a year-on-year increase of 22.5%, and further growth to $975 billion in 2026, an increase of 26.3% [1][2] Group 1: Revenue Growth Projections - The growth in semiconductor revenue is primarily driven by strong demand for artificial intelligence applications and data center infrastructure, leading to increased demand for logic and memory chips [1] - Logic chip revenue is expected to grow by 37.1% in 2025, making it the fastest-growing product category, followed by memory chips with a 27.8% increase [1] - The revenue for sensors is projected to grow by 10.4%, microprocessors by 7.9%, analog chips by 7.5%, and optoelectronic components by 3.7%, while discrete components are expected to decline by 0.4% due to weak demand in the automotive sector [1] Group 2: Regional Performance - In 2025, only Japan is expected to see a revenue decline of 4.1%, while the Americas will experience the highest growth at 29.1%, followed by the Asia-Pacific region at 24.9% and Europe with a modest increase of 5.6% [1] - For 2026, all regions are anticipated to show growth, with the U.S. projected to grow by 34.4% and Asia-Pacific by 24.9%, while Europe and Japan are expected to have growth rates around 1% [1] Group 3: Market Trends and Adjustments - The latest revenue forecasts have been revised upward compared to earlier predictions made in June, which estimated 2025 revenues at $700.9 billion with an 11.2% year-on-year growth [2] - The third quarter of 2025 saw global semiconductor sales reach $208.4 billion, marking a 15.8% increase from the previous quarter, driven by rising demand for various semiconductor products, particularly in the Asia-Pacific and Americas regions [2]

Market Overview - Diamond Hill Capital reported a rebound in markets after a downturn in early April, with the Russell 3000 Index showing an approximate increase of 11% [1] - Large-cap stocks experienced the highest growth, rising just over 11%, while small-cap and mid-cap stocks gained around 8.5% each [1] - The Select Strategy portfolio returned 7.31% (net) for the quarter, underperforming compared to the Russell 3000 Index's return of 10.99% [1] Company Focus: Coherent Corp. (NYSE:COHR) - Coherent Corp. is highlighted as a significant contributor to the portfolio, benefiting from increased demand for optical transceivers in data centers [3] - The stock of Coherent Corp. saw a one-month return of 22.97% and a 52-week gain of 21.59%, closing at $107.97 per share with a market capitalization of $16.822 billion on September 29, 2025 [2] - Coherent Corp. was held by 66 hedge fund portfolios at the end of Q2 2025, an increase from 61 in the previous quarter [3] Investment Insights - While Coherent Corp. is recognized for its potential, the company suggests that certain AI stocks may offer greater upside potential with less downside risk [3] - The investor letter indicates a focus on undervalued AI stocks that could benefit from Trump-era tariffs and the trend of onshoring [3]