Damo warns that the semiconductor sector's valuations are overheated, and tech giants may develop their own chips or weaken the industry's pricing capacity

The Zhitong Finance App learned that Lisa Shalett, chief investment officer of Morgan Stanley Wealth Management, said that with more and more signs that chip makers' pricing capabilities are being challenged, investors should be cautious about the semiconductor sector. She believes that the market's optimistic expectations for investment in artificial intelligence (AI) infrastructure may have driven chip stocks to rise too much, and the growth rate of AI capital expenditure is beginning to slow down.

In an interview with the media on Friday, Shalett said that the AI data center technology architecture is changing, and more and more hyperscale cloud service providers are beginning to design their own lower-cost proprietary AI chips to reduce their dependence on traditional chip vendors.

She pointed out that a typical phenomenon is currently emerging in the AI industry chain. When supply chain bottlenecks cause some companies to obtain too high profits, downstream enterprises will speed up alternative solutions with lower R&D costs. Currently, some memory chip manufacturers are benefiting from higher profits brought about by tight supply and demand, but this pricing advantage may not be maintained for a long time.

As Shalett expressed this opinion, South Korean memory chip giant SK Hynix (SKHY.US) officially landed on NASDAQ on Friday. The company previously raised $26.5 billion through an initial public offering (IPO), setting the record for the largest foreign company's IPO in the US. However, its stock price has fluctuated sharply recently, and has accumulated a decline of about 26% since last month's high.

Despite this, Shalett believes that at present, market capital is still abundant in the AI investment theme, and the semiconductor sector is clearly overvalued. According to her report released this week, many indicators, including semiconductor ETFs and the Philadelphia Semiconductor Index, show that the sector is already “clearly overbought.” The data shows that since 2022, the price-earnings ratio of the Philadelphia Semiconductor Index has more than tripled.

She also mentioned that Meta Platforms (META.US)'s recent adjustments to its AI strategy also reflect that some tech giants are beginning to re-evaluate the return on investment of hundreds of billions of dollars of AI capital expenditure. Earlier, Meta CEO Zuckerberg said that the company is considering leasing out part of its AI infrastructure to improve asset utilization efficiency and commercialization returns.

Shalett believes that this indicates that internal discussions have begun within technology companies about the construction pace, return on investment, and how to achieve early commercialization of AI investments. She predicts that the trend of slowing AI infrastructure capital expenditure growth is still in its early stages, but the future is worthy of continued market attention.