Summary of J.P. Morgan's Semiconductor Research Call Industry Overview - The focus is on the **semiconductor industry**, particularly in relation to **datacenter capital expenditures (capex)** and the growth of **artificial intelligence (AI)** technologies. Key Points Datacenter Capex Trends - **Long-term elevated spending** in cloud and hyperscale datacenter infrastructure is expected, indicating significant upside to future capex expectations [1] - Growth forecasts for 2025 and 2026 have been **materially increased**, supported by guidance from major U.S. cloud service providers [1][4] - **Microsoft**, **Alphabet**, and **Meta** have all raised their capex guidance for 2025, signaling strong spending momentum into 2026 [1] Specific Company Guidance - **Meta** raised its 2025 capex guidance midpoint to **$71 billion** (up **81% year-over-year**), from a previous estimate of **$69 billion** (up **76% year-over-year**) [1][4] - **Google** increased its 2025 capex guidance to **$92 billion** (up **75% year-over-year**), from **$85 billion** (up **60%+ year-over-year**) [4] - **Microsoft** reported capex of approximately **$35 billion** for the first quarter of FY26, exceeding its prior estimate of **$30 billion+** [4] AI Infrastructure Spending - The ongoing demand for AI is driving a **multi-year growth runway** for companies involved in AI infrastructure, particularly for **NVIDIA (NVDA)**, **Broadcom (AVGO)**, **Marvell (MRVL)**, **AMD**, and **Micron (MU)** [1][4] - Companies are investing heavily in AI-related technologies, with **NVIDIA** expected to benefit significantly from datacenter GPU demand [4] Market Dynamics - The **cloud backlog** for Google has grown to **$155 billion**, indicating strong momentum in cloud services [4] - The overall sentiment from the earnings reports of U.S. cloud service providers supports a **medium-term positive outlook** for capex growth in 2026 and 2027 [1] Investment Opportunities - Companies with leverage to AI infrastructure spending are expected to experience strong tailwinds, including: - **NVIDIA** (AI compute acceleration processors) - **Broadcom** (Google TPU ASIC XPU, Meta MTIA ASIC XPUs) - **Marvell** (Trainium ASIC XPUs) - **AMD** (second-largest merchant GPU supplier) - **Micron** (HBM memory, eSSD) - **Western Digital** (HDD) - **Astera Labs** (networking connectivity) [1][4] Additional Insights - The aggressive investment strategies of cloud providers are aimed at supporting the development of next-generation AI models and enhancing core business operations [1] - The anticipated capex growth in 2026 is expected to be notably larger than in 2025, reflecting a robust demand for AI capabilities [1][4]