Semiconductor sector shows signs of recovery amid focus on AMD, SanDisk, and Western Digital earnings

Huo Xing Finance reports: After a sharp decline in July, sentiment in the semiconductor sector began to recover in early August. The PHLX Semiconductor Index posted its worst monthly performance since 2008 last month, falling more than 20% from its June high. However, on Monday Eastern Time, NVIDIA rose nearly 3%, AMD increased about 2%, and the SOX Index closed up approximately 1%;此前, on Thursday of last week, the SOX surged 8.2%, marking its largest single-day gain in 15 months. Market focus is now shifting from whether AI-related trading has become overheated to which companies still have earnings fundamentals to support them after the sharp correction. Jefferies’ assessment is the most direct: The latest earnings reports from Microsoft and Amazon provided compelling evidence that large-scale AI investments are generating tangible returns for customers and infrastructure suppliers. As core buyers in NVIDIA, AMD, Broadcom, memory, and networking chip supply chains, these cloud providers’ continued procurement of computing power ensures ongoing demand for semiconductor orders. Citigroup emphasized sector differentiation in its report. The bank believes recent semiconductor corrections were primarily driven by concerns over oil prices, U.S. Treasury yields, and AI capital spending—but this pullback presents a buying opportunity. Citi notes that data centers remain the strongest end market, accounting for approximately 34% of semiconductor demand and projected to surpass the entire semiconductor TAM by 2030. The bank also highlighted that for companies that have already reported earnings, consensus revenue estimates for 2026 and 2027 have been raised by 4% and 7% respectively, while EPS estimates have been lifted by 7% and 8%. Additionally, Citi favors semiconductor equipment stocks, as capital expenditure upgrades by TSMC, Intel, and others directly benefit the equipment supply chain. Bank of America expects hyperscalers to collectively spend approximately $860 billion in capital expenditures this year, representing an approximate 80% year-over-year increase. This provides strong valuation support for GPUs, ASICs, HBM, advanced packaging, and equipment chains. UBS’s Chief Investment Officer noted that investor sentiment improved after hyperscalers announced accelerated cloud growth and signaled continued increases in AI spending. The bank forecasts AI spending will reach $900 billion this year and rise to $1.2 trillion by 2027, reinforcing a constructive outlook for semiconductor and hardware demand. Morgan Stanley views this week’s earnings as a new validation point. The bank expects AMD, SanDisk, and Western Digital to deliver “another strong set of results.” These three companies have remained among the strongest performers in the AI hardware chain this year: AMD has more than doubled, Western Digital has more than tripled, and SanDisk has risen approximately 400%. If AMD and storage manufacturers continue to confirm robust demand in their upcoming earnings reports, the recovery in semiconductor stocks will be further substantiated.