Semiconductors are critical in helping address AI backlogs, says BofA's Vivek Arya

Introduces Vivek Arya as staying bullish on semiconductors despite recent market volatility and skepticism about the rally's sustainability.

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Vivek Arya

The debate has shifted from 'if they build it, will they come?' to 'can you build fast enough?' due to constraints across computing, memory, networking, storage, and power. Semiconductors are critical to addressing these constraints.

The SOX index's performance is driven by earnings growth, not multiple expansion.

Skeptics compare the current rally to past tech bubbles (e.g., telecom/internet) and doubt its longevity.

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Vivek Arya

This cycle is different because infrastructure utilization is exceptionally high (no 'dark GPU'), supply is disciplined (e.g., TSMC monopoly prevents double-ordering), and hyperscalers are planning years ahead. Key stocks trade below market multiples, so valuations are not out of control.

OpenAI and Anthropic are buying all available computing capacity. NVIDIA, Broadcom, and Micron all trade below market multiples despite strong growth.

Acknowledges that the rally has lifted all semiconductor names, even those where Arya was neutral/underperform, suggesting the move is broad and fundamental.

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Vivek Arya

Hyperscalers cannot grow 10-25% annually without investing in computing infrastructure. Monetizing 4 billion users requires extracting more insight per user, which depends on semiconductor infrastructure.

User growth is flat, so revenue growth must come from deeper user insights enabled by computing investment.

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