The Zhitong Finance App learned that Ed Yardeni, president of Yardeni Research and senior Wall Street strategist, said on Monday that the recent sell-off in artificial intelligence (AI) related stocks did not mean that the market had completely crashed; on the contrary, it helped cool down the AI investment boom that had previously been overheated. He believes that AI technology has real commercial value and is expected to generate considerable profits in the future, and that the recent pullback may provide investors with an opportunity to lay out semiconductor stocks.
In an interview, Yardeni said that recent tech stock adjustments are “squeezing out part of the air in the AI bubble,” which is a positive sign of the healthy development of the market. Although it is still difficult to determine which technology companies can ultimately benefit the most from AI development, he believes AI technology itself will continue to develop and gradually achieve commercial profits.
Yardeni pointed out that with the recent fall in stock prices, the valuation of AI-related stocks has declined, but Wall Street analysts are still continuously raising the profit expectations of related companies, which means that the investment appeal of some stocks is increasing.
He is particularly optimistic about the prospects for a rebound in the semiconductor sector. According to the data, the current expected price-earnings ratio of semiconductor stocks is about 13.5 times, which is 18.5 times lower than the S&P 500 index. At the same time, the continued growth of cloud computing business revenue, the large number of orders accumulated by enterprises, and the need for AI infrastructure construction all provide support for the future growth of the semiconductor industry.
According to Yardeni Research's research report, analysts expect the semiconductor industry's profit to grow by 114.3% in 2026 and a further increase of 77.9% in 2027, indicating that the market is still optimistic about the industry's profit growth in the next two years.
Furthermore, the total remaining performance obligations of Microsoft (MSFT.US), Oracle (ORCL.US), Amazon (AMZN.US), and Google's parent company Alphabet (GOOGL.US) reached 2.5 trillion US dollars. This indicator mainly reflects the scale of the business where the company has signed a contract but has not yet confirmed revenue, which means that large technology companies will still have a large amount of contract revenue to be fulfilled in the future.
However, Yardeni Research also pointed out that how to raise sufficient funds for AI infrastructure construction and complete related projects as planned will be the main challenge for technology companies to turn these contracts into actual revenue.
In the field of memory chips, the agency believes that due to strong demand for AI, production capacity orders from major memory chip manufacturers have been scheduled for 2029, which gives related companies a stronger voice in product pricing.
When Yardeni expressed this opinion, the US semiconductor sector had just experienced a round of intense sell-off. On Friday, Intel (INTC.US) shares plummeted 28.6%, SanDisk (SNDK.US) fell 13.5%, and Chaowei Semiconductor (AMD.US) fell 10.9%.
However, Yardeni believes that this round of adjustments does not mean that investors are completely withdrawing from US stocks, but rather that market capital is beginning to shift from AI-related stocks, which had seen large increases before, to other sectors such as healthcare, finance, and industry.
Regarding the overall trend of US stocks, Yardeni still expects a round of upward trend at the end of the year, but reminds investors to pay attention to short-term fluctuations that may be brought about by the US midterm elections and the geopolitical situation.
He said that the US midterm elections held on Tuesday and the possibility of another escalation of the war involving Iran may become uncertain factors in the market. Yardeni Research has been advising investors since September 15 to be cautious and consider keeping some of their cash to look for buying opportunities after the election or when geopolitical risks increase further.
Yardeni also warned that if US political differences widen further after the midterm elections, future negotiations on government debt and the federal government shutdown may become more difficult, thus bringing new risks to the financial market in 2027. Despite this, he is still optimistic about the year-end performance of US stocks. He expects the market to usher in a traditional “Christmas market” from Thanksgiving to the end of December.
On the market side, US stock index futures rebounded early Monday after a week leading the decline in technology stocks. S&P 500 futures rose 0.5%, Nasdaq 100 futures rose 0.8%, and Dow futures rose 271 points, or about 0.52%. Investors are paying close attention to upcoming corporate earnings reports, employment data, and the US midterm election results.
However, retail investors' sentiment remains relatively cautious. According to data from the investment community Stocktwits, investors' views on ETFs tracking the S&P 500 index have changed from “bullish” the previous day to “neutral,” while continuing to be bearish on ETFs tracking the Nasdaq 100 Index and the Dow Jones Industrial Average.
Overall, Yardeni believes that recent technology stock adjustments are more of a correction to overvaluation and excessive concentration of holdings, rather than a reversal of the AI industry's long-term growth logic. As valuations fall and profit expectations continue to improve, AI-related sectors such as semiconductors are still expected to regain the favor of investors.