One of the largest ETFs in the chip sector in terms of assets under management. $VanEck Semiconductor ETF (SMH.US)$ After a pullback of over 10% last week, it has risen for four consecutive days this week, regaining most of the lost ground. Among the components, several major "leading brothers"— $NVIDIA (NVDA.US)$Please use your Futubull account to access the feature.$Taiwan Semiconductor (TSM.US)$and$Broadcom (AVGO.US)$ 等也一齐冲高，周内分别累涨约15%、10%、20%，均收复上周跌幅。

This week, chip stocks made a significant reversal, and one of the most optimistic catalysts was the comments from AI 'godfather' Huang Renxun. He stated that the rush to buy AI chips is still ongoing, and NVIDIA is still in short supply, greatly consolidating market confidence in the bull market and causing NVIDIA market cap to surge by over $200 billion overnight, driving up various semiconductor concept stocks.

In the past period of time, artificial intelligence has faced problems such as market expectations being too high and bubble speculation. At the same time, uncertainties such as interest rate cuts and elections in the second half of the year have added fuel to the fire. Faced with such intense volatility, several major chip giants still receive bullish views from Wall Street, with a general potential increase of 20%-40%. How should investors view the investment prospects of chip stocks?

What is the market worried about regarding the wide fluctuations of AI chip stocks?

In the just-concluded earnings season, both NVIDIA and Broadcom experienced capital flight, and their impressive performances were still unable to meet overly high expectations, with the "sell after the news" phenomenon becoming commonplace. NVIDIA's stock price fell more than 6% on the day of its earnings release, and Broadcom even plummeted by over 10%.

At that time, NVIDIA's performance was considered excellent but "not surprising", and Blackwell faced difficulties in mass production. Broadcom, on the other hand, experienced a slowdown in AI semiconductor business growth, Q4 revenue guidance fell short of expectations, causing panic selling among investors.

On the one hand, many people are concerned about whether the economic slowdown will hinder the high growth of AI demand at an astonishing speed. At the same time, for the major buyers of AI chip products, the large internet companies, they also face a severe test: can AI generate enough revenue to justify their massive investments in GPUs and other AI hardware?

However, this week's significant rebound indicates that after this round of excessive selling, investors have also "cooled down" and negative sentiment is gradually being digested. Bernstein analyst Stacy Rasgon stated that investor enthusiasm may be in a "pause phase", but the market's hot demand for AI chip stocks "clearly has not diminished". Clearly, this viewpoint has also been confirmed by Huang Renxun's comments.

In the options market, risk appetite has returned in the past two weeks, and trading in call options for Nvidia and Broadcom has been very active. In the past two days, the call options for Nvidia have increased by up to 10 times, while a call option for Broadcom with an expiration date of October 18 and an exercise price of $194 has made a profit of 6 times over.

Rebound or reversal, what is the outlook for chip stocks?

For AI technology stocks, especially chip companies, the market is overheated and accompanied by "overly high expectations", which puts pressure on short-term performance. In addition, semiconductors are mainly used in household appliances, smartphones, computers, or cars, and are also adversely affected by the declining demand in these industries.

However, in the long run, artificial intelligence is still a vast field with a broad outlook. The prospects of semiconductor stocks, on the other hand, depend on whether future demand is strong. On this matter, international authoritative institutions generally hold optimistic expectations, and the semiconductor industry and its AI demand may still have a expansion space of 20%-30%.

The Semiconductor Equipment and Materials International (SEMI) estimates that global semiconductor revenue is expected to grow by 20% this year, with AI chips and storage being the main growth drivers. Next year, as communication, industrial, and automotive demand recover healthily, semiconductor revenue will grow by another 20%.

With the end of the downturn in the cyclical market and the rise in semiconductor demand, the World Semiconductor Trade Statistics estimated that by 2024, sales will increase to over $600 billion, with an annual growth rate reaching double digits.

Affected by the semiconductor cycle, the market was sluggish at the beginning of 2023, but global sales rebounded to $527 billion in the second half of the year. Nearly 1 trillion semiconductors were sold worldwide, with over 100 chips per person on Earth. As the economic recession ends, the demand for semiconductors will continue to rise.

According to the report by research firm Futurum Group, the global market value of processors and accelerators used for artificial intelligence applications in the datacenter market is expected to soar from $38 billion in 2022 to $138 billion in 2028, with a compound annual growth rate of 30%.

Policy support will continue to drive the thriving trend of the chip industry. The "Chip and Science Act," released by the United States, has attracted more investment into the semiconductor manufacturing industry. As of August of this year, since the proposal of the chip act by Congress, the total investment added by companies in the semiconductor ecosystem in the United States has reached nearly $450 billion across 28 states.

In addition, as the Federal Reserve moves towards interest rate cuts, low interest rate environment can allow technology companies, especially AI companies, to obtain loans and issue bonds at a lower cost, thereby reducing research and capital costs, and increasingreturn on investment.

华尔街多数分析师也对芯片股普遍持逢低买入的观点。高盛表示，随着人工智能等深刻的代际技术变革，基于短期成本和回报经济学来做出判断是徒劳的。重点在于长期目标。高盛估计，从2025年下半年起，生成式AI将开始为行业增长做出实质性贡献。

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