Stacy Rasgon on AI Compute Demand and Semiconductor Market Trends

AI Compute Demand and Market Concerns

• 💡 AI compute demand has seen a consistent rise since the launch of DeepSeek, despite some investor concerns about peak AI capex.
• ⚠️ Investors are worried about whether 2026 can still be a growth year for AI capex, with some rumors of lease cancellations.
• 🚀 However, companies actively spending on AI still appear to be proceeding at full steam ahead, with ongoing races to develop new models.

DeepSeek and Compute Demand

• 🧠 The launch of DeepSeek sparked debate, with concerns that more effective models might require less compute.
• 📈 Contrary to these fears, the speaker, a semiconductor analyst, believes that cost reduction drives demand, a trend observed for decades in the semiconductor industry.
• 📊 Since DeepSeek's launch, compute demand and capex numbers have increased, with reports of GPU shortages in China and elsewhere.

Macroeconomic Factors and AI Resilience

• 🌍 Broader macroeconomic factors, including tariffs, have contributed to a general de-risking and de-grossing in the AI sector, impacting higher multiples.
• 📈 The semiconductor market historically shows a strong correlation with worldwide GDP growth, suggesting that a recession could impact the sector.
• 💬 However, AI spending related to productivity savings and cost reductions may prove more resilient during a recession compared to discretionary spending.
• 💰 It's suggested that AI could potentially replace labor, which might even lead to increased AI spending in a downturn.