Jason's Chips
Buy-Side AI & Semiconductor Investor
AI semiconductor hardware faces weaker demand than in an unconstrained AI race: mainstream existential safety fears make a lab that accelerates a regulatory target, so labs will train less than they otherwise would. Anthropic's essay makes no compute-binding commitment, but the lost demand falls on hardware suppliers while labs can sell inference. The near-term stock path depends on which market narrative takes hold, not a new change in fundamentals this weekend. x.comÂ
The Anthropic news is bearish for semiconductors, at least short term, because Fable cannot generate inference demand, future models cannot generate training demand, and an uncertainty premium builds. @scaling01 explains that models from Anthropic, and potentially OpenAI, Google and xAI, would make zero revenue outside the US, and foreign staff could not work on them. Other markets, except perhaps China, lack the AI focus or budgets to compensate. More news is coming; this is not equilibrium. x.com x.com x.comÂ
Semiconductor stocks could take a short-term hit because the market's premise that frontier models will handle most valuable AI work is likely wrong, which might be a small shock. As models improve fast, frontier models will be too costly for most tasks, so AI labs' growth and margins slow and fundraising gets harder. Compute they reserved at hyperscalers and neoclouds could be released, slowing capex growth. Long term this is not bad for semis, but the market is unprepared for the gap. x.comÂ
Semiconductor hardware faces pressure as AI shifts from racing on capex to competing on capital efficiency. Meta selling surplus compute amid slower-than-expected agent progress raises doubts about returns on AI spending, while Anthropic is reportedly exploring custom chips with Samsung. Nvidia moving to revenue sharing and Meta renting out capacity squeeze resellers like CoreWeave. Makers with capacity but no pricing power will be hit first if demand growth slows. AI demand has not collapsed. … Show more
Semiconductor demand could withstand slower OpenAI and Anthropic growth if open-source models and post-training add more chip demand than it removes. Falling token prices need not erode per-GPU economics as cost per token falls and output per GPU rises, potentially keeping rental rates firm. The balance is unresolved; the lean is bullish, but markets may focus on the easier-to-see slowdown. Shares could chop until numbers defeat the bears, or a well-founded bear case could trigger heavy selling. … Show more
AI suppliers' demand may not justify today's investment. Roughly $3 trillion in revenue absent last year is needed to support the spending, yet GDP growth is weak and many companies may be seeing only incremental gains. If the estimate that Anthropic uses two-thirds of its compute for training is right, it could triple inference supply. The most likely outcome for many companies, roughly half the S&P 500, is slowing growth, compressed margins and multiples; when the bubble ends is uncertain. … Show more
Calls from AI lab leaders to pace frontier training are a negative for semiconductor and memory stocks, because training restraint cuts accelerator demand and the infrastructure multiple takes the hit before any lab's revenue does. Sam Altman said progress should be slower than it otherwise could be. Seoul sold off first, with SK hynix down more than 6% and Samsung more than 4%, then ASML, Infineon and Micron. Anthropic expects positive adjusted operating income: the margin stays with the labs. … Show more
Semiconductors could stay undersupplied for a long time as more capable AI per dollar creates more uses and drives compute demand. Micron and NVIDIA trade at low forward P/Es because investors fear peak cyclical earnings, yet current earnings show no slowdown. Shortages may worsen as AI adoption spreads, though the industry could remain cyclical; a reversal of the forced rollover trade is hoped for, not assured. x.com x.com x.comÂ
Semiconductors are betting on AI labs whose spending commitments the stock market takes seriously, despite little visibility into what is happening at the labs. They selectively leaked good news for three years, but last week brought the opposite; Anthropic has also delayed an IPO originally slated for before Labor Day. Broadcom CEO Hock Tan warns that enterprise AI spending may yield little learning. x.com x.com x.comÂ
AI-exposed semiconductors face near-term demand risk as Anthropic's revenue growth slows. Monthly additions fell from $10B to ~$2-3B, though October may improve and one-off headwinds contributed. The AI selloff is not irrational amid rates, debt, politics and supply-chain risks. Despite long-term optimism, a short-term bull case needs an Anthropic IPO or OpenAI fundraise, calmer rates and debt funding, blowout cloud earnings with EPS upgrades, and new applications reviving token monetization. … Show more
The AI trade's biggest risk is not revenue concentration in Anthropic and OpenAI but whether scaling laws keep delivering better models that unlock valuable use cases. Steve Eisman, quoted by @firesidealpha, sees an OpenAI failure as the big risk, but that is like calling Amazon's dominance e-commerce's top risk 15 years ago. If Chinese labs or open models take share, they still need semis, and US enterprises' open models will mostly be hosted domestically by Amazon and others. x.comÂ
Slowing AI capital spending keeps the semiconductor growth scare in play. Meta's cash flow is negative and Lam Research's capex is slowing, further evidence as the sector faces a growth-to-value rotation and a Fed pause next week. x.comÂ
