Organization: Semiconductor Sector May See Sentiment Bottom, with Focus on AMD, Western Digital, and SanDisk Earnings This Week

BlockBeats News, August 4th. After a sharp drop in July, the semiconductor sector's sentiment has started to improve. The PHLX Semiconductor Index recorded its worst monthly performance since 2008 last month, falling over 20% from its June high at one point. However, on Monday in the Eastern U.S. time, Nvidia rose by nearly 3%, AMD rose by about 2%, and the SOX Index closed up by about 1%; previously, the SOX surged by 8.2% in a single day last Thursday, marking its largest one-day gain in 15 months. The market focus is shifting from "Is AI trading overheated?" to "Which companies still have performance support after the sharp decline?"

Jeffries' assessment is the most direct. The firm stated that Microsoft and Amazon's latest financial reports provided important evidence showing that large-scale AI investment is delivering tangible returns for customers and infrastructure providers. As the two companies are core buyers in the Nvidia, AMD, Broadcom, storage, and networking chip supply chain, as long as cloud providers continue to purchase computing power, chip orders will still have support.

Citi emphasized industry chain differentiation in its report. The firm believes that the recent semiconductor pullback mainly came from oil prices, U.S. bond yields, and AI capital expenditure concerns, but this round of decline presents a buying opportunity. Citi pointed out that the data center is still the strongest end market, accounting for about 34% of semiconductor demand, and is expected to exceed the entire semiconductor TAM by 2030. The firm also stated that among the companies that have reported earnings, revenue expectations for 2026 and 2027 were raised by 4% and 7%, respectively, and EPS expectations were raised by 7% and 8%, respectively. At the same time, Citi prefers semiconductor equipment stocks because the capital expenditure increase by TSMC, Intel, and others has a more direct impact on the equipment chain.

BofA expects that hyperscalers' total capital expenditure this year may reach around $860 billion, an increase of about 80% year-on-year. This provides valuation support for GPU, ASIC, HBM, advanced packaging, and equipment chains.

UBS CIO stated that after hyperscalers announced accelerated cloud growth and released signals to continue increasing AI spending, investor sentiment has improved. The firm expects AI spending to reach $900 billion this year, rising to $1.2 trillion in 2027, reinforcing a constructive view on semiconductor and hardware demand.

Morgan Stanley sees this week's earnings reports as a new validation point. The firm expects AMD, SanDisk, and Western Digital to deliver "another set of strong performance." These three companies have remained strong targets in the AI hardware chain so far this year: AMD has more than doubled, Western Digital has more than doubled, and SanDisk has surged by about 400%. If AMD and storage manufacturers' earnings reports continue to confirm demand strength, the chip stocks' recovery rally will be more confident.