Applied Materials and KLA shares have seen a significant drop in their value recently, with investors showing concerns over the outlook of the semiconductor industry. The rapid rise of artificial intelligence (AI) technology has led to speculation that the industry may soon undergo a major transformation, which has triggered a surge in investments in the sector.
However, according to at least one analyst, the “AI hype” may be overdone, and the impact on the semiconductor industry may be more limited than expected.
Over the past few years, there has been a significant amount of investment in the development of AI technology, and many experts believe that AI will eventually become a transformative force across multiple industries, including the semiconductor industry. However, not everyone is convinced that the industry is going to experience a major disruption from AI.
In a recent note to clients, analyst Sidney Ho of Deutsche Bank argued that AI is unlikely to cause a major disruption to the semiconductor industry in the near future. Ho noted that while AI will likely become increasingly important in the coming years, there are limits to its impact, and many of the more significant changes may still be years away.
Ho also suggested that investors may be overestimating the impact of AI on the semiconductor industry, leading to inflated valuations for companies in the sector. He specifically named Applied Materials and KLA as companies whose valuations may be inflated, and warned that the recent drop in their shares may be a sign of things to come.
Despite the recent drop in these companies’ shares, however, there are still many analysts who believe that the semiconductor industry is poised for significant growth in the years ahead. With advancements in technology continuing to drive demand for semiconductors, there is no doubt that the industry will continue to be a major player in the world of technology for many years to come. However, the extent to which AI technology will disrupt the industry remains an open question, and investors would be wise to approach the sector with a measure of caution.