The semiconductor sector continues to be under pressure! Wall Street tech boss Dan Ives bucked the trend: the sell-off was a “far excessive” market reaction, and the demand gap is still huge

The Zhitong Finance App learned that global artificial intelligence (AI) transactions are undergoing a stress test due to concerns about excessive valuations, rising interest rates, and increased competition, and the semiconductor sector is facing particularly strong questions. However, senior Wall Street tech analyst Dan Ives believes that this round of semiconductor stock sell-off is “far too much of a market reaction.”

In an interview, Dan Ives said that the overall market is currently “nervous” as far as market concerns about the AI construction boom and “a certain slowdown” are concerned. He believes that about 5% to 10% of data center projects may not be implemented in the end, but he also pointed out that related transactions are progressing at an accelerated pace, and the ratio of demand to supply has reached 13:1.

According to Dan Ives, the upcoming earnings season should help ease investors' nervousness. “This will be reflected in performance, whether compared to hyperscalers (hyperscalers) or chip companies,” he said.

Dan Ives listed Microsoft (MSFT.US), Nvidia (NVDA.. US), Palantir (PLTR.US), and CrowdStrike (CRWD.US) as his most optimistic AI investment targets. When talking about Meta (META.US), Dan Ives reiterated that Muse, the AI agent launched by the company, is a “game changing product.” He said that Meta will continue to catch up with Anthropic and OpenAI, and this will only further accelerate this “AI arms race.”

Worries are heating up! The semiconductor sector suffered a severe setback

Driven by Samsung Electronics falling nearly 7% and SK Hynix falling more than 10%, the Korea Composite Stock Price Index (Kospi) plummeted by more than 5% on Tuesday; the index has now withdrawn by a total of one-third from its all-time high in June. Before the US stock market on Tuesday, memory chip stocks such as Micron Technology (MU.US) and SanDisk (SNDK.US) generally fell; the Philadelphia Semiconductor Index has fallen more than 7% from this month's high.

The “trigger” for the sell-off was news about Changxin Storage's progress in the next generation of high-density DRAM architectures, which raised concerns about heated competition. According to reports, Changxin Storage is accelerating the deployment of next-generation DRAM technology, and plans to launch DDR5 RDIMM server memory products using a 4F² storage unit architecture by the end of this year. For a long time, major global storage vendors, including Samsung Electronics, SK Hynix, and Micron, have been studying next-generation high-density DRAM architectures. However, large-scale commercialization is progressing relatively slowly due to extremely difficult aspects such as design complexity, manufacturing process, and yield control.

According to some reports, Samsung Electronics' current mass production schedule on a similar technology route is expected to take several years. If this judgment is accurate, Changxin Storage may gain a time advantage of about two years in commercializing products related to the 4F² architecture. Being able to manufacture more complex products will also give the company a better competitive position as global supply constraints begin to ease in the next few years.

In addition to the news that Changxin Storage is making progress in the next generation of high-density DRAM architectures, the reason for the sell-off of memory chip stocks also included statements made by executives of the two major chip giants. Broadcom (AVGO.US) CEO Chen Fuyang said at an event in Singapore on Monday that as the entire industry competes to build infrastructure and provide computing power support for increasingly complex AI models, financing may become a greater obstacle to AI expansion, and its impact may even exceed the shortage of semiconductors, memory chips, or electricity.

Intel (INTC.US) CEO Chen Liwu, who appeared on the same stage, also expressed concerns about financing issues. He pointed out that capital costs continue to rise, and the market is also questioning whether companies that invest heavily in AI can ultimately obtain sufficient returns. Chen Liwu said, “If there are any current challenges, they are capital and capital costs. On the other hand, in the long run, people want to see return on investment (ROI).”

Chen Fuyang also said that the AI boom has attracted a group of investors whose investment strategies are like gamblers, and he believes that some of them simply don't understand what they are betting on. Chen Fuyang said, “Many investors don't even know what they are investing in. They set extremely high expectations, only to find themselves almost like they were in a casino.” He added that many AI companies, including OpenAI, lose up to several billion dollars every year. This type of service requires huge investment in high-end chip, data center, and model development, and the entire industry has yet to find a sustainable business model.

As the third quarter earnings season for US stocks begins, investors are carefully examining whether the billions of dollars invested in chips, data centers, and computing infrastructure can generate sufficient returns to prove the rationality of the rapid rise in AI trading, especially when some market veterans such as Qiaoshui founder Dario issued bubble warnings. Companies such as Asmack and TSMC will release results this week, which may provide new clues as to whether the huge investment in AI is paying off.