Man Group: AI Semiconductor Trade Entering Next Phase

London – The rapid ascent in AI-driven semiconductor stocks may be entering a new phase, according to analysis from Man Group PLC. Recent volatility in tech stocks suggests that simply owning the sector is becoming less viable, and investors need to become more selective.

Man Group's assessment indicates that the supply squeeze in memory chips is beginning to ease as Chinese producers regain competitive footing. Even proponents of the sector acknowledge that pricing power is fading.

It remains unclear whether recent market movements reflect temporary jitters after a strong run or a more significant market peak. Upcoming second-quarter earnings calls from major tech companies will provide further insight. The scale of recent market swings has highlighted the leverage and short-term capital that had accumulated in these stocks, alongside growing concerns about systemic risk in AI-focused investments.

Man Group sees future opportunities broadening beyond chip manufacturers to include the "builders" and "beneficiaries" – companies constructing the next layer of AI technology and those poised to profit from its adoption.

The firm identifies two key risks for the semiconductor sector: first, a high degree of concentration, where the spending of major cloud providers relies on commitments from a small number of private model companies. Second, China's role, which is considered underestimated. The country has narrowed the gap in chip manufacturing and entered the model layer with domestic open-source systems competing on cost.