AI chip stocks stumble as investors weigh slowdown in hyperscaler spending

The Philadelphia Semiconductor Index has dropped 15% from its June peak as investors take profits and reassess the sustainability of AI-driven capital expenditure by hyperscalers. The pullback comes after the semi industry added nearly half the S&P 500's gains this year Source: CNN.

Chips under pressure

UBS estimates hyperscaler capex will rise 76% this year but slow to 25% in 2027 and 6% in 2028 Source: CNA. Some active managers, including Edmond de Rothschild and LFG+ZEST, have cut semiconductor exposure and rotated into hyperscalers, software, and healthcare Source: CNA. However, Morgan Stanley CEO Ted Pick argues the investment cycle is only 10-15% complete, forecasting data center capex could reach $1.5tn by 2028 Source: TheNextWeb. The divergence underscores uncertainty: TSMC posted a beat-and-raise quarter with a 77% profit jump, yet its shares fell 4% in premarket trading Source: CNBC.

Wall Street's AI financing boom

Goldman Sachs reported a record $3.4bn in Q2 investment banking fees, up 55%, with CEO David Solomon declaring "the middle of an AI CapEx super cycle" Source: TheNextWeb. JPMorgan, Morgan Stanley, and Bank of America also posted strong fee growth Source: TheNextWeb. Yet JPMorgan's CFO noted the bank passed on some data center deals due to power supply concerns Source: TheNextWeb. Meanwhile, European earnings growth is energy-driven, not AI-focused: STOXX 600 profits are forecast up 15.3% year-on-year, but ex-energy that drops to 6% .