Concerns that the US presidential election could slow data center construction have emerged, with views that delays to AI investment could affect the growth of semiconductor demand. Semiconductors are a growth industry, but their boom-and-bust cycles are pronounced, and stocks tend to move ahead of the cycle.
In 1987, I covered the semiconductor industry as a Japan equity fund manager at an investment advisory firm. This article explains 3 points investors should know when considering semiconductor-related stocks, as well as whether they are worth investing in now.
While curbing data center investment could bring long-term benefits to hyperscalers, demand growth for semiconductor-related stocks could slow from next year onward, the article says. Views were expressed that construction regulations could tighten in Texas and other states where administrations are changing following the Republicans’ major defeat, as governorships change to Democratic control.
The semiconductor industry is a growth industry, and technological innovation is expected to continue. Feature sizes are advancing into areas below 2 nanometers, with examples including NVIDIA’s latest GPUs and Japanese company Rapidus’s 2nm prototypes. The article also explains that the existence of waves known as the silicon cycle makes sharp declines and surges likely in the short term, even as the industry rises over the long term.