Semiconductors: supercycle or superbubble?

The FT Unhedged piece argues semiconductor stocks have surged — led by memory firms — driven by AI data-centre demand, pushing the Philadelphia Semiconductor Index up ~160% year-on-year. Rising earnings (analysts’ estimates for the index are up sharply) have at least partly justified the rally, and chip names contributed roughly half of the S&P 500’s gain over the past month. However, the article warns the sector’s concentrated, fragile supply chain (helium, sulphur, energy and geographic concentration in Taiwan/South Korea) and geopolitical risks could disrupt production, leaving downside risk if demand softens. Overall, fundamentals look strong but risks to supply and uncertain duration of AI-driven demand make the market case ambiguous.