Summary of J.P. Morgan's Semiconductor Research Call Industry Overview - **Industry**: Semiconductors, specifically focusing on AI-related infrastructure and hyperscaler data center capital expenditures (Capex) [1][4] Key Insights - **Data Center Capex Growth**: - Data center spending by the Top 4 U.S. hyperscalers is projected to grow approximately **60% year-over-year (Y/Y) in 2025**, an increase from the previous estimate of **40%** [1] - This growth translates to an incremental spend of **$100 billion+** in 2025 compared to 2024, up from **$75-80 billion** in 2024 [1] - Data center Capex is expected to track around **30% growth in 2026**, revised from **20%** previously, indicating an incremental spend of **$80-85 billion** [1] - **AI Accelerator Market**: - The spending environment is anticipated to support a **40-50% compound annual growth rate (CAGR)** for the AI accelerator total addressable market (TAM), starting from a base of approximately **$200 billion in 2025** [1] - **Hyperscaler Capex Intensity**: - The capital intensity for the Top 5 U.S. hyperscalers is currently around **18% of gross revenue**, expected to rise to **21% by 2026** [1] - Incremental compute demand and upgrade cycles are likely to maintain capital intensity at higher levels than historical averages [1] Company-Specific Insights - **Key Beneficiaries**: - Companies expected to benefit from strong AI server spending include: - **NVIDIA (NVDA)**: Focused on AI compute acceleration processors - **Broadcom (AVGO)**: Involved with Google TPU and Meta MTIA ASICs - **Marvell (MRVL)**: Engaged in AI XPU ramps - **Advanced Micro Devices (AMD)**: Positioned as the second-largest merchant GPU supplier - **Micron Technology (MU)**: Notable for HBM memory and eSSD products [4] - **Market Dynamics**: - The demand for AI compute is driving a multi-year growth trajectory for NVDA's data center GPU business, with AMD poised to capture demand through its MI400/MI500 series [4] - Broadcom and Marvell are expected to benefit from continued cloud and hyperscale AI XPU ramps, while Micron is ramping its HBM3E 12-hi products [4] Additional Considerations - **Emerging Spend Sources**: - Significant spending is occurring outside traditional hyperscalers, including neoclouds and sovereign AI projects, which are becoming increasingly impactful as they scale [1] - **Long-Term Outlook**: - The expectation is that Capex growth forecasts will continue to increase as visibility and confidence in sustained spending growth solidify [1] Conclusion - The semiconductor industry, particularly in the context of AI infrastructure, is poised for substantial growth driven by hyperscaler spending and evolving market dynamics. Key companies in this space are well-positioned to capitalize on these trends, with expectations of significant revenue opportunities in the coming years [1][4]