The reflex read on chips right now is caution. The sector gave back part of a powerful spring rally just as it entered its weakest seasonal stretch of the year, but the buildout driving it is only accelerating.
The PHLX Semiconductor Index — as tracked by the iShares Semiconductor ETF (NASDAQ:SOXX) — fell 11% since the start of the third quarter, historically its softest window, after an 88% second-quarter surge.
Yet, global cloud and AI infrastructure spending is still on track to approach $1.5 trillion by 2027, up 40 to 50% year over year, according to Bank of America’s analyst Vivek Arya.
The analyst continues to expect that the long-term winners of the artificial intelligence infrastructure boom remain the companies most leveraged to AI capital spending.
“History suggests periods of consolidation are often followed by renewed momentum as investors regain confidence in the next leg of earnings and capex growth,” Arya said.
