Big Tech's $1.2 Trillion Hyperscaler AI Bet Could Ignite the Next Semiconductor ETF Rally
Key takeaways
- Big Tech's $1.2 trillion AI bet could spark a semiconductor ETF rally, driven by increased demand for equipment and memory chips.
- Bank of America expects hyperscaler capex to top $1.2 trillion over the next 12 months, up from roughly $700 billion.
- Morgan Stanley projects $800 billion in 2026 and $1.2 trillion in 2027.
- The VanEck Semiconductor ETF (SMH) holds many of Bank of America's highest-conviction names, including Nvidia (NVDA), Broadcom (AVGO), AMD (AMD), Micron (MU), Applied Materials (AMAT), and KLA (KLAC).
What happened
Big Tech's projected $1.2 trillion AI spending in 2027 could boost semiconductor stocks, reversing recent declines.
Why it matters
This surge in AI spending could ignite the next semiconductor ETF rally, benefiting diversified funds like the VanEck Semiconductor ETF (SMH) and the iShares Semiconductor ETF.
Short-term and longer-term
Short-term. Semiconductor stocks may be due for a rebound as Big Tech's AI spending is expected to increase, driving demand for equipment and memory chips.
Longer-term. The potential rebound in the semiconductor sector driven by increased demand for AI equipment and memory chips could benefit diversified funds like the VanEck Semiconductor ETF (SMH) and the iShares Semiconductor ETF.