Federated Hermes 13F Portfolio

The biggest adds read like a deliberate upgrade of their AI and cash‑flow stack, not a chase of whatever worked last quarter.

On the AI front they didn’t just sit on NVIDIA at 2.73% — they added there and then went hard into second‑wave beneficiaries. Micron (up 47.6%), AMD (up 119.4%), and Astera Labs (up 244.6%) all feature among the largest dollar adds, signaling a belief that memory, accelerators, and connectivity silicon are where incremental economics of the AI build‑out will accrue next.

They also made Apple a clear core: the position was lifted 33.0% to 2.55%, a rare size upgrade in a name already compounding well, suggesting confidence in its transition from hardware to services‑anchored cash machine. GE Aerospace and Automatic Data Processing were boosted by 36.7% and 2050.8% respectively, classic recurring‑revenue industrial and services plays that quietly monetize the same digitization tailwinds without headline AI risk.

Outside of tech and services, the fund is leaning into under‑owned defensives with operational leverage. Medtronic almost doubled (+93.9%), and additions to AbbVie and Amgen point to a bet that large‑cap pharma and devices still offer reasonable entry points relative to their pipeline optionality. Even Regions Financial — effectively rebuilt from a token stake — shows a willingness to own select regional banks where credit and capital fears have overshot fundamentals.

The sell tape is not a repudiation of prior winners so much as classic position‑management: crystallize outsized gains and recycle into what still screens mispriced.

Alphabet tops the trim list, with a 22.1% reduction and roughly $387.6M freed despite the stake still sitting comfortably in the money. Broadcom, another AI darling, was cut 21.3% for about $192.1M of liquidity, and Microsoft was pared 12.6%. All three remain large, profitable platforms; the cuts look like risk normalization rather than a view change on digital advertising or cloud.

They’re also lightening up on some of the more fully rerated infrastructure and cyclicals. Vertiv (-27.4%) and Howmet Aerospace (-37.0%) trims follow big runs in data‑center gear and aerospace content, indicating the team believes the easy upside is behind them. Chevron was reduced 31.6%, a decisive move in energy that says they no longer need as much commodity beta in a book now dominated by structural growers.

Financials and staples see selective pruning rather than abandonment. PNC lost 20.8% of its shares, Philip Morris was cut 15.4%, and American Tower and Costco were each trimmed mid‑single digits. These are clean funding sources: durable, liquid assets whose upside‑to‑downside skew looks less compelling than the new capital destinations.

The sector chart shows a book incrementally more tilted toward AI, but with a notable build‑out in boring‑but‑beautiful cash‑flow engines.

Technology’s weight edged up to 36.03%, yet that headline hides an internal rotation. Capital is migrating from mature software and search (Alphabet, Microsoft) and partially from infrastructure winners (Broadcom, Vertiv) into semiconductors and AI plumbing such as Micron, AMD, Astera Labs, and GE Aerospace.

Industrials jumped from 8.58% to 9.81% as Comfort Systems and Quanta Services were both increased, and ADP became a real position. This is a portfolio that wants the pick‑and‑shovel cash flows of engineering, construction, and outsourced payroll alongside its digital bets.

Utilities held roughly steady at 7.01%, but with more emphasis through additions to WEC, PPL, and incremental FirstEnergy — a quiet expression of rate‑sensitive downside protection. Finance and consumer discretionary ticked down modestly, reflecting trims in PNC, Costco, and Viking, while healthcare crept up via AbbVie, Amgen, and Medtronic. Energy is the only sector meaningfully cut, with Chevron’s reduction taking the group down to 1.33% from 2.08%.

Taken together, the 2026‑Q2 moves paint a manager trying to have its cake and eat it: maximize participation in the AI and digitization upcycle while methodically pre‑wiring the portfolio for the next drawdown.

On one side of the barbell sit NVIDIA, the beefed‑up positions in Micron, AMD, Astera Labs, and the continued stake in Alphabet and Microsoft even after trims. On the other sit industrial services (ADP, Quanta, Comfort Systems), regulated utilities, and an upgraded healthcare sleeve where valuation risk is more contained.

The willingness to expand losers like CrowdStrike, Tesla, Lululemon, and Medtronic — all showing modest or negative gains versus their average buy prices — suggests they’re not averse to averaging into what they see as temporarily mispriced growth franchises. That’s a different mindset from simply letting winners run and cutting anything that wobbles.

If the AI capex super‑cycle continues, this book is set up to participate more through hardware, connectivity, and infrastructure than through just the obvious platform names. If volatility returns or rates bite, the bolstered utilities, industrial cash flows, and big‑pharma balance sheets give Federated Hermes a credible plan B, even if it comes at the cost of some near‑term beta.