Spyglass Capital Management LLC, an investment management firm, released its second-quarter investor letter for “Spyglass Growth Strategy”. A copy of the letter can be downloaded here. Spyglass Growth Strategy appreciated 24.63% in the second quarter, significantly outperforming the Bloomberg Midcap Growth Index’s 14.05% increase, the Bloomberg 2500 Growth Index’s 19.01% gain, and the Bloomberg 500 Index’s 15.61% return for the same period. The Strategy’s performance in Q2 was a reversal from Q2 driven by easing geopolitical tensions, notably a US-Iran ceasefire, declining oil prices, and a rebound in software stocks after early-year volatility. Small caps and growth stocks outperformed, with Technology, Industrials, and Financials leading sectors. The portfolio’s earnings growth remains above 40%, while current valuations do not yet reflect this performance. Despite recent portfolio success—85% of companies exceeding revenue estimates—the overall portfolio faces multiple compression with a slight negative year-to-date return. However, the firm remains confident that fundamentals will prevail over volatility, emphasizing that the market’s short-term inefficiencies may present opportunities for value extraction. In addition, please check the Firm’s top five holdings to know its best picks in 2026.
In its Q2 2026 investor letter, the Spyglass Growth Strategy highlighted MKS Inc. (NASDAQ:MKSI) as a notable contributor. MKS Inc. (NASDAQ:MKSI) is a leading technology company that offers advanced foundational technology solutions to semiconductor manufacturing, electronics and packaging, and specialty industrial applications. On July 30, 2026, MKS Inc. (NASDAQ:MKSI) closed at $293.30 per share, reflecting a market capitalization of $19.82 billion. MKS Inc. (NASDAQ:MKSI) posted a one-month return of -19.77%, while its shares gained 216.23% over the past 52 weeks.
Spyglass Growth Strategy stated the following regarding MKS Inc. (NASDAQ:MKSI) in its Q2 2026 investor update:
“MKS Inc. (NASDAQ:MKSI)), a semiconductor capital equipment components supplier, was a new position during the second quarter. Semiconductor chips are produced on wafer fabrication equipment (“WFE”) which are sold by firms such as Applied Materials, Lam Research, Tokyo Electron, KLA, and ASML. This equipment in turn relies on vacuum, gas delivery, RF power, and photonics subsystems which MKS supplies, and the Company holds the #1 or #2 share position in products touching approximately 85% of WFE spend. We see these as sticky, specified-in positions that gain content as chips grow more complex.
Through a full cycle, our research indicates MKS’s semiconductor revenue has historically run at 2-2.5% of WFE spend, but the ratio compressed to roughly 1.5% between 2023-25 as customers digested excess inventory, and not because MKS lost share. We believe with inventories having now normalized, this intensity is reverting back to historical norms at the same moment AI is driving WFE spend from approximately $110 billion in 2025 toward what we expect will be $175 billion or more by 2027. We see the shift toward chiplets and high-bandwidth memory also adding a second growth driver by inflecting demand for advanced packaging, where we view MKS as a leader in laser via drilling and electroplating chemistry. We think the market currently penalizes MKS for its NAND exposure, yet NAND capital spending remains near trough levels after the last cycle’s overcapacity, so a recovery there would represent upside to our numbers rather than a risk we are paying for…” (Click here to read the full text)
MKS Inc. (NASDAQ:MKSI) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 71 hedge fund portfolios held MKS Inc. (NASDAQ:MKSI) at the end of the first quarter, up from 52 in the previous quarter. In Q1 2026, MKS Inc. (NASDAQ:MKSI) reported revenue of $1.08 billion, up 4% sequentially and 15% year-over-year. While we acknowledge the risk and potential of MKS Inc. (NASDAQ:MKSI) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MKS Inc. (NASDAQ:MKSI) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered MKS Inc. (NASDAQ:MKSI) and shared WS Amati Global Innovation Fund’s views on the company. In addition, please check out our hedge fund investor letters Q2 2026 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
