"Semiconductors Are Raking in Huge Money... The Boom Will Continue for Years," Forecast Says

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[Financial News] Semiconductor stocks are reportedly delivering their strongest performance on record since the start of the dot-com bubble in the early 2000s, driven by the AI investment boom.
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On the 28th, Yonhap News, citing the Financial Times (FT), reported that the Philadelphia Semiconductor Index (SOX), a key benchmark for the semiconductor sector, has risen by about 75% so far this year. As a result, it is expected to post its biggest annual gain since the start of related data collection in 1999.
The market capitalization of the SOX, which tracks the share prices of 30 global semiconductor companies listed on U.S. exchanges, including NVIDIA, Micron, and TSMC, has increased by more than $5 trillion over the past two months. That is roughly 1.5 times the market value of the FTSE 100 Index, the benchmark for the U.K. stock market.
The current boom in the semiconductor sector is firmly rooted in explosive demand from Big Tech companies. Supply has failed to keep up with demand, pushing chip prices sharply higher. Alphabet Inc., the operator of Google, along with Amazon.com, Inc., Microsoft, and Meta, is expected to spend a combined $725 billion in capital expenditures this year.
In this regard, Charles Lemonides, founder of hedge fund ValueWorks, told FT that "chip demand from hyperscalers is clearly here to stay, and semiconductor companies are making a fortune," adding that "this boom will continue for years to come."
BofA strategists also said in a report this week that they are "more convinced that strength in AI infrastructure will continue," and judged that tight supply conditions and "underappreciated demand from governments, companies, and industries around the world" are likely to drive additional growth.
Jamie Dimon, CEO of JPMorgan Chase & Co., often called the emperor of Wall Street, also maintained a positive outlook at a recent conference, saying, "We are in a 'gung-ho' phase right now, with energy everywhere, and things are very good at the moment."
One notable point is that the boom is spreading beyond key AI hardware components such as GPUs and memory chips. As expectations grow that the AI boom will lift demand across the broader IT hardware sector, Intel, the dominant player in CPUs, has posted a share-price gain far exceeding that of NVIDIA, the leading GPU maker.
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Even with the current super momentum, risks remain. If a worsening economic slowdown caused by various headwinds leads Big Tech companies to scale back AI investment plans, semiconductor demand could weaken. Nelson Yu, head of equities at AllianceBernstein, said, "The current situation is not simple enough to declare either 'bubble' or 'not a bubble.' There is real demand creation," but added, "As with all commodities, price increases eventually lead to demand destruction, and that is what we should be most wary of right now."
bng@fnnews.com Kim Hee-sun Reporter