Sharp fluctuations have followed a remarkable surge in semiconductor equities, prompting concerns for Gulf investors investing billions of dollars in AI infrastructure. According to analysts, the focus now is on whether top chipmakers can leverage the demand for AI into long-term profits.
Although analysts emphasized that a recent sell-off had not weakened the long-term investment case, GCC sovereign wealth funds and conglomerates have increased their spending on AI infrastructure. The Philadelphia Semiconductor Index (SOX) fell more than 20 percent from its record high in late June, and on July 17 it entered technical bear market territory during a brutal week for chipmakers.
This week, the index, which tracks 30 of the biggest US-listed chipmakers, such as Nvidia, AMD, and Qualcomm, rose as investors positioned themselves ahead of what were anticipated to be robust earnings from chipmakers Micron and Intel, as well as Google parent Alphabet. The benchmark increased by 105% between March and its June peak.
Because of the influence of semiconductor giants like MediaTek, Taiwan Semiconductor Manufacturing Co., Samsung, and SK Hynix, Taiwan’s Taiex and South Korea’s Kospi indexes are also closely watched, even though the SOX is still the primary indicator of sentiment toward US-listed chipmakers.
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