Are Semiconductors and AI the New Tech Frontier?

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Here’s why this theme is set to transform technology as we know it:

• AI demand surge: the next digital revolution
  • AI is driving the next wave of technological advancement, with applications ranging from autonomous vehicles to personalized medicine. The demand for AI-enabled solutions is projected to skyrocket, with the AI market expected to grow from USD142 billion in 2022 to over USD500 billion by 2030.
  • Semiconductors are at the heart of this revolution, providing the processing power needed to run complex AI algorithms efficiently. As AI adoption expands, the need for more advanced, faster, and energy-efficient chips will only grow.

• Semiconductors: the critical infrastructure of AI
  • The performance of AI systems heavily depends on the capabilities of the semiconductors that power them. Innovations in semiconductor technology are enabling faster data processing, reduced power consumption, and greater scalability—essential for AI’s continued evolution.
  • Industry leaders like Nvidia and AMD are already spearheading this movement, with AI-optimized chips that offer unparalleled processing power. The development of specialized AI chips is creating new markets within the semiconductor industry.

• What is the growth potential?
  • The global semiconductor market is expected to grow from USD600 billion in 2022 to nearly USD1 trillion by 2030, driven by the surging demand for AI applications. This convergence of AI and semiconductor technology presents a unique opportunity, as companies at the forefront of this trend should capitalize on the AI boom.
  • With AI’s increasing influence across sectors—from healthcare to finance—the demand for AI-optimized semiconductors is in high demand. The companies that can deliver the most advanced, efficient, and scalable semiconductor solutions will be the ones to watch.
  • To be clear, it is not just tech companies benefiting enormously from AI investments. For instance, Walmart is one of many retailers making investments in AI to streamline operations. In that sense retailers stocks such as Walmart and Costco have surged over the past year, just as AI applications continued to grow.

Key risks to consider

Semiconductors are the backbone of growth in the AI space, and thus comes with it a high level of volatility depending on the economic cycle. A potential risk is that semiconductor stocks correct significantly during a period of slower global economic growth. There is also the risk that investors drive valuations of semiconductor companies too high too fast and thus semiconductors stocks could see a period of negative or sideways price action. In last, it is possible that investors currently or in the future overestimate how fast AI adoption and AI infrastructure investments could take place. These are only risks to consider.

Conclusion

In conclusion, companies operating at the intersection of semiconductors and AI are well positioned to capture a rapidly expanding new AI market. The explosive growth of AI and its reliance on advanced semiconductor technology make this an area ripe for innovation. As AI continues to shape the future, the demand for cutting-edge chips should be a key driver of technological progress.

This article is brought to you by the Advisory Solutions Team. 
Contributors: Maxime Bonnet - Head of Advisory Solutions, Paul de La Baume - Investment Advisor