Artificial intelligence (AI) chip stocks had a blockbuster 2025, with leading names – Nvidia, Intel, Broadcom, and AMD – each rallying more than 40% in the trailing 12 months.
These semiconductor names even outperformed the largest hyperscalers (Microsoft, Amazon) this year – yet amid supply bottlenecks and valuation concerns, some worry the trade may lose steam in 2026.
Bernstein’s senior analyst Stacy Rasgon, however, remains confident that the “AI chip boom” isn’t over yet, adding that fundamentals, demand, and growth prospects signal continued momentum ahead.
Why Rasgon believes the AI chips stock rally still has legs
Speaking with CNBC today, Rasgon said the sheer scale of the global demand for AI chips signals the rally will continue in the coming year.
According to him, consensus estimates currently sit well below what Nvidia and Broadcom’s future guidance indicating “there’s still plenty of room for numbers to move higher.”
On Tuesday, the Bernstein analyst also pointed to committed volumes already in place for 2026 – suggesting that concerns about digestion cycles or peak spending are rather overblown.
All in all, innovation across graphic processing units (GPUs) and custom silicon confirms that the opportunity in AI chips is still massive and yet to close to saturation, he concluded, reiterating his “buy” rating on NVDA and AVGO.
Bernstein analyst shrugs off valuation concerns
While some investors worry that AI chip stocks are priced for perfection, Stacy Rasgon dismissed the idea that valuations are excessive.
“Even valuations are not crazy for a lot of these names,” he said, citing Nvidia’s forward price-to-earnings ratio in the low 20s despite “amazing growth.”
He acknowledged that fears of overspending or cyclical downturns have been present since the AI trade began, but stressed that they have not materialized.
“People have been worried about that since this started,” Rasgon noted, adding that 2025 proved those concerns misplaced.
For him, the bigger question is whether the opportunity remains large – not whether multiples are stretched, since growth prospects still outweigh near-term valuation risks.
Why AI chip stocks may even rally into 2027
Looking further ahead, the Bernstein analyst argued that the AI chip stocks’ rally may even extend beyond 2026.
He pointed to spending commitments from major players like OpenAI, which are not expected to kick in until late 2026 and may not fully materialize until 2027.
According to Rasgon, the market is still in an early growth phase, with demand expanding across multiple fronts. “If the opportunity is still big, then everybody thrives,” Rasgon said.
That conviction underpins his advice to “just own the space” rather than worry about short-term swings.
With innovation accelerating and infrastructure investments only beginning, the cycle may remain durable even into the next decade, he noted on “Squawk on the Street” today.
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