Semiconductor stocks have risen sharply, making it harder to find value as investors pay historic premiums. Even with strong AI-driven demand, the semis may not sustain rapid gains indefinitely, especially if the cycle turns and investors take profits. Micron reaching a $1 trillion market cap reflects how quickly expectations have shifted. Sony is presented as a potential hidden AI beneficiary despite recent operating setbacks, including losses tied to the Bungie acquisition and slower PlayStation 5 unit sales amid higher component costs. AI-related “memory tax” pressures margins, but the article claims much of the negative outlook is already reflected in the stock’s valuation, citing a forward P/E of 16.89.
"With the iShares Semiconductor ETF ( NASDAQ:SOXX | SOXX Price Prediction) soaring more than 6% in a single day on Tuesday, it feels like the overheated names are just getting bubblier and bubblier. Of course, there's still relative value in the semis. But, for the most part, you're paying historic premiums, and if there's any hint of a turning of the cycle, investors might be quick to take profits."
"Just because AI demand is through the roof doesn't mean the semis can keep going like this forever. In any case, it's becoming harder to just keep watching historic gainers in the semi space from the sidelines. Micron (NASDAQ:MU) joining the $1 trillion market cap club was certainly not on the bingo cards of many going into the year."
"Sony might be one of the last of the cheap AI plays - a long-term horizon might be needed, though. Just because semis are running too hot, potentially fanning bubble fears, though, does not mean there isn't anything worthy to buy out there in some of the less-obvious corners of the market. Sony ( NYSE:SONY) stands out as more of a hidden gem of an AI beneficiary, while investors ditch the stock over a handful of notable operating stumbles."
"Whether we're talking about the big losses from its Bungie acquisition (active development on its former cash cow Destiny 2 franchise has finally ended) or slowing PlayStation 5 unit sales amid rising component costs due to AI, it feels like Sony is on the wrong side of the AI revolution. Indeed, Sony is feeling the heat as the "memory tax" caused by the rise of AI really takes a bite out of margins. Still, much of that negativity seems mostly priced into the stock at this point."
Read at 24/7 Wall St.
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