KEY POINTS
- Micron, Intel and AMD added about US$2 trillion in value last quarter, the sector's best three months since 2000.
- Money is rotating out of Nvidia (up just 15%) into "AI enablers" like Marvell, Arm and Micron.
- Valuations are now stretched (AMD ~83x earnings) and the sector fell 10%+ just last week, so the risk is rising.
- ASX investors can play the theme through speculative local names like Weebit Nano, Archer Materials and BrainChip, but they're high-risk.
The AI chip trade just delivered one of the most staggering quarters in market history. In the three months to June, Micron, Intel and AMD added roughly US$2 trillion in combined market value, and the VanEck Semiconductor ETF (NASDAQ: SMH) posted its best quarter since 2000. The interesting part? Nvidia, the poster child of the AI boom, rose just 15% in the same period. So what’s going on, and is it too late to jump in?
The AI Trade Is Changing Hands
Here’s the shift that matters. For two years, AI investing basically meant buying Nvidia. Now investors are spreading their bets into the companies that supply the rest of the AI machine, and those “AI enablers” are flying.
The numbers tell the story. Over the quarter, Marvell climbed around 200%, Arm rose 134%, while Micron, Intel and AMD all saw their stock prices roughly triple. What this means is simple: the market has realised that building AI data centres needs far more than just Nvidia’s chips. It needs memory, networking gear and processors from a whole supply chain, and money is now chasing all of it.
The fuel behind this is enormous spending. Big tech companies are set to pour around US$750 billion into AI infrastructure in 2026. That kind of money lifts the entire sector, not just one name.
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Are AI Chip Stocks Getting Too Crowded?
This is where investors need to be careful. After gains this big, a lot of good news is already baked into prices. AMD trades at about 83 times forward earnings, a rich price that assumes years of strong growth. Intel’s valuation looks even more stretched against profits it hasn’t fully earned back yet.
The risk is real and recent. Just last week, the sector dropped more than 10% in a matter of days on fears the AI trade had run too hot. Legendary investor Jeremy Grantham has gone further, warning that AI stocks could eventually fall as much as 70%.
Our view: the demand underneath this boom is genuine, not a fantasy. But buyers stepping in now are paying top dollar near record highs, and volatility cuts both ways. This is a momentum trade with real earnings backing it, which makes it both exciting and risky.
How ASX Investors Can Play It
You don’t have to chase expensive US giants to get exposure. The ASX has a small group of early-stage AI chip stocks riding the same wave. Weebit Nano (ASX:WBT) develops next-generation ReRAM memory and has signed deals with chipmakers onsemi and Texas Instruments. Archer Materials (ASX:AXE) is building a room-temperature quantum chip, and BrainChip (ASX:BRN) makes low-power “edge” AI processors, with production of its AKD1500 chip expected later in 2026.
A word of caution: all three are speculative, earn little revenue today, and carry far more risk than the US mega-caps. They suit growth investors comfortable with big swings, not the cautious ones.
The bottom line: the AI trade is broadening, not ending. Whether you look overseas or locally, focus on reasonable entry points rather than chasing the hottest name of the week.
