Key insights
- The semiconductor sector is experiencing bottlenecks in CPUs, memory/storage (Micron, SanDisk), and optics connectivity. Analysts expect these bottlenecks to persist until 2027, driven by AI demand. The cyclical nature of the sector is being offset by the long-term growth potential of AI, including future applications in robotics and autonomous systems, suggesting continued positive momentum for semiconductor stocks.
The semiconductor sector (SOXX) has been ripping higher this year.
Yahoo Finance Senior Business Reporter Ines Ferré chats with Yahoo Finance Senior Reporter Brooke DiPalma about the sector's three "bottlenecks," highlighting how Micron (MU) and Sandisk (SNDK) factor in.
Investors are really liking semiconductor stocks right now, Anj, but you are watching some bottlenecks that are up against the industry. What are some of those, Anj?
Yeah, I was speaking to Angelo Zino over at CFRA Research, and we were talking about the bottlenecks within the industry, within the AI industry, and he says the markets love bottlenecks.
And so the ones that you're seeing currently are CPUs, as we just mentioned, and why we've seen, uh, Intel and, uh, AMD soaring so much.
Uh before it was GPUs with Nvidia, now it's CPUs. Now it's also memory and storage as well. So you've seen the likes of Micron hitting all-time highs. You've also seen uh a SanDisk also going to all-time highs as well.
And then the third one being the optics, uh optics connectivity. So, uh laser, optics, that is also another one that we don't talk that much about, but you'll but now Nvidia just announced a partnership with Corning. So that speaks to that whole space.
As far of this as the cyclicality of this, yes, this is a very cyclical sector. What bulls are saying is is that, well, this time it you have AI that is really driving all of this, and we're not even getting yet into the physical AI robots and autonomous.
I mean, when that really starts to boom, that'll be sort of another surge forward. But what analysts are saying is that at least Angelo was saying that these bottlenecks are going to be around. It's it's expected to until maybe 2027.