US Markets
Home›US Markets›Sectors›AI investors trim semiconductors as hyperscaler capex…
AI investors trim semiconductors as hyperscaler capex growth slows
UBS projects hyperscaler capital spending will rise 76% this year to about $673 billion, then slow sharply in 2027 and 2028.
Investors are starting to rethink AI-related allocations as expectations of rapid hyperscaler spending expansion ease over the next few years, leading some fund managers to cut semiconductor exposure and rotate toward software and major cloud providers, according to Yahoo Finance.
For much of the last two years, the dominant approach has been to buy chip and infrastructure suppliers tied to ongoing data center buildouts by Microsoft, Amazon, Alphabet and Meta. UBS expects hyperscaler capital expenditure to increase 76% this year to roughly $673 billion, but forecasts growth slowing to 25% in 2027 and 6% in 2028.
Some managers say that moderation in capex would be supportive for hyperscalers but a negative signal for the semiconductor industry. Alexis Bossard of Edmond de Rothschild Asset Management said his team has reduced semiconductor exposure because valuations have become demanding, adding that when hyperscalers stop increasing capex it should provide relief for them and weigh on semi stocks.
The Philadelphia Semiconductor Index, with major holdings including Nvidia, Broadcom, Micron, ASML and TSMC, has more than doubled over the past year, though it is down nearly 18% from its June high. Over the same period, the equal-weighted S&P 500 gained 11%, while Europe’s STOXX 600 rose about 8%, and Bank of America’s July survey found semiconductors were the most crowded trade among global fund managers, with 82% citing the sector.
Latest closeS&P 500 7,533.77 ▼0.5%