Even the AI gold rush can't stop the chip industry's boom-bust cycle, warns Morningstar (www.businessinsider.com)

Morningstar warns that the AI-driven semiconductor boom may be masking an imminent, cyclical downturn. Analysts say the sector’s roughly four-year cycle has been stretched by intense AI demand since ChatGPT’s 2022 breakout, but semiconductor billings — a key health gauge — are already slowing. With AI spending likely to peak around 2025 and macro and consumer weakness rising, Morningstar sees risks of a slowdown in 2026. The advisory undercuts exuberant valuations and signals that some gains tied to AI hype may be temporary, prompting investors and firms to reassess long-term assumptions about sustained chip demand and profitability. Technically, the report highlights uneven exposure across chip categories: cutting-edge AI accelerators remain supply-constrained and strategically important, while commodity memory and legacy chips face softer demand as smartphone and consumer-electronics sales falter. Foundries and memory makers are particularly cyclical, though leaders like TSMC are relatively insulated by technological lead and heavy U.S. investments. The broader implication: capital allocation must be disciplined to avoid oversupply and margin compression, and stakeholders should temper expectations that AI investment will automatically translate into durable corporate profits — a point echoed by Goldman Sachs, which notes many firms mention AI but few quantify its earnings impact.