The semiconductor industry, valued at $530 billion, is experiencing a widening gap between companies riding the AI wave and those missing out. Analysts predict that this division will continue until at least 2025, particularly as traditional chipmakers face challenges in key markets like personal computers and automobiles.
Last week's financial reports highlighted this divide. ASML, a Dutch chip manufacturing giant, reported a significant drop in orders and lowered its 2025 sales forecast, leading to a stock decline of over 16%. This sparked renewed concerns about the health of the semiconductor industry, causing major drops in the Philadelphia Semiconductor Index and shares of Applied Materials, KLA, and Lam Research.
In contrast, TSMC eased some worries by raising its 2024 sales guidance, citing real and stabilizing demand for AI chips. However, experts from Gabelli Funds warn that the industry's divergence is likely to persist as AI demand remains a critical factor.
Traditional chip giants like Intel and Samsung are struggling amidst this shift. Intel has cut costs and delayed new factory plans, while Samsung apologized to investors after a disappointing Q3 due to delayed high-bandwidth memory chip shipments. Texas Instruments' upcoming earnings report is also under scrutiny as it will provide further insights into the industry's trajectory.
Despite the challenges, companies benefiting from increased AI capital expenditures, like NVIDIA, continue to thrive. In the last quarter, major tech companies invested over $50 billion in capital expenditures, largely for AI infrastructure.
NVIDIA has emerged as the biggest winner in this AI surge, with its stock reaching new heights, having surged 175% this year. However, analysts are cautiously observing NVIDIA's upcoming quarterly earnings and AI investment strategies, as its high valuation and growth expectations pose potential risks.
