AI capex keeps boosting chip earnings, but semis still trade near their 10-year average
a16z Newsletter · rss · 2026-07-24
a16z’s charts roundup argues that AI capex has turned semiconductors into an earnings machine, yet the sector’s valuation still looks surprisingly ordinary.
- Semis are pulling a huge share of S&P earnings growth: the post says roughly 50% of expected S&P earnings growth is coming from semiconductors.
- Multiples are not especially stretched: forward P/E for the sector is described as hovering around its 10-year average.
- Micron stands out: analysts expect about 60% YoY earnings growth, yet the stock was trading near 6x earnings as of July 21 in the cited data.
The piece also argues that the market is skeptical about how long the AI-driven boom can last, because chips are cyclical and new supply eventually catches up. A later section notes that IRL socializing and experience spending are rebounding, with weekend-night foot traffic and moviegoing strength suggesting people still want physical-world interaction.
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