Rihard Jarc
Co-Founder & CIO of New Era Funds, AI/Cloud/Semiconductor Research
Alphabet and Amazon are set to dominate chip design over the next five years; supply-chain bottlenecks are the main thing holding their chip businesses back, and those won't last forever. Per a Tech Taiwan report shared by @jukan05, Google told TSMC it wants to become a direct major customer, pursuing an Apple-style COT model that bypasses Broadcom and MediaTek. x.comÂ
Alphabet's TPUs and Amazon's Trainium are winning Anthropic's compute because they work and generate tokens efficiently, not because Anthropic needs their investment. Anthropic can raise any money it wants after ARR rose from $9 billion to $44 billion in four months, yet it signed over 8GW of new TPU and Trainium deals. For big AI labs both chips are serious Nvidia alternatives, though Nvidia will still dominate most other workloads because Amazon and Google cannot scale supply as fast. x.comÂ
Deployment limits will slow AI hardware spending and expose cyclical suppliers such as SK hynix. Amazon has hardware waiting for power, and Broadcom's CEO said some clients delayed shipments because they could not deploy. Cheap forward multiples can mark a cyclical peak as analysts extrapolate growth. The slowdown could have begun or be a year away; timing is uncertain, so reducing cyclical risk in favor of healthier, genuinely cheap names looks better. x.com x.com x.comÂ
ASIC design is a race to the bottom, very bearish for Broadcom, MediaTek and Marvell as more leading-edge wafer capacity comes online from TSMC, Intel and Samsung. Google sources IP and swaps vendors constantly, showing the design houses add little differentiated value, transceivers aside. AMD, Apple and Nvidia do not outsource because it dilutes margins and most IP is one-size-fits-all. At scale, wafer allocation is the real constraint; the shift may take a year or two. x.com x.comÂ
Alphabet's lagging AI lab undermines the case for owning it for ANT exposure. The semiconductor-business framing does not make up for that lag, and hyperscalers are no longer needed for this exposure. x.comÂ
AI suppliers' profits and signed demand distinguish this buildout from dotcom overcapacity. AI leaders rose 2.9x on 3.1x earnings growth versus 7.4x on 2.1x before 2000; cloud providers have $2.3T in signed backlog. Alphabet, Microsoft, Amazon and Meta could repay debt with about six months' cash flow, unlike 2008's leveraged banks. Micron has multiyear take-or-pay deals and ASML has orders years ahead. Memory profits are cyclical; TSMC, ASML and GE Vernova remain favored in AI's early innings. … Show more
Amazon should win as cloud providers move to designing their own hardware end to end over the long term. That shift favors the clouds and the fabs, which are hard to disintermediate because their value is not just a blueprint, while it threatens merchant chip designers such as Nvidia, AMD, Broadcom, Marvell and MediaTek. x.comÂ
China's entry into chip design and fabrication is a structural change: stop fading China as Western AI chip and cloud leaders get steeply discounted. China dominates nearly every manufacturing category; with multi-patterning its DUV tools perform near newer nodes and could scale massively or reach EUV. Chinese open models co-designed for Chinese chips could pull sovereignty-minded countries onto its tech stack. As Ford fared after China joined the WTO, so may Nvidia, ASML, TSMC and AWS by 2050. … Show more
Alphabet's raised capex plan supports the semiconductor trade in Broadcom, Nvidia and Micron. Google now sees 2026 capex of $195B-$205B, up from $180B-$190B, with significant increases in 2027, and Meta, Amazon, Microsoft and Oracle will likely say the same. x.comÂ
Semiconductor trade faces a capex growth ceiling even if AI delivers what bulls expect. Spending cannot compound at 70-100% a year indefinitely, and compute per dollar roughly doubles every two years, so the same budget buys more capacity later. Today's chip valuations also demand years of 20% AI earnings growth beyond 2028: roughly 10.9 extra years for AMD, 8.9 for ASML, 7 for Marvell and 6.4 for TSMC, versus 1.6 for Broadcom and 0.8 for Nvidia; Micron needs none under the chart's assumptions. … Show more
AI chip suppliers remain preferable to hyperscalers as the AI buildout outgrows big tech's balance sheets. AI capex forecasts rose $400B, but required funding hit $5.5T; cash flow ($1.0T) and new equity ($0.4T) cover barely a quarter, leaving high-grade debt ($2.1T) and alternative capital ($1.4T). Hyperscaler debt jumped 92% with 81% capex growth, versus 4% for other high-grade issuers, turning cash-rich credits into capital-intensive utility profiles, super bullish for semis. x.com x.comÂ
TSMC and ASML are good longs because their bottlenecks are the least easily solved, so the excess returns from owning them should prove more durable through a cycle. Bottlenecks elsewhere tend to get solved, which is why a significant improvement in another part of the chain is nice but not revolutionary, and should already be assumed by anyone underwriting semis or AI demand. x.comÂ
