Monetary Matters with Jack Farley
Monetary Matters with Jack Farley

Stacy Rasgon: “Demand Is Off The Charts” in Semiconductors… And Set To Double Again Soon

October 8, 2026

AI Summary

5 min read

Semiconductors: Demand Surge, But Market Scepticism Persists

When Stacy Rasgon, Bernstein's veteran semiconductor analyst, took a group of clients on his annual Silicon Valley roadshow in September, the message from 11 companies across two days was remarkably consistent: "Everybody sounds great. Demand is off the charts." Yet despite earnings in the semiconductor sector being up roughly 100%, the sector's earnings multiple is down and stocks remain well below their June highs. This tension between booming fundamentals and cautious markets defines the current moment in chips.

The Cycle Question That Won't Go Away

Semiconductors are inherently cyclical, and investors are conditioned to anticipate peaks. As earnings rise, the market increasingly discounts them, compressing multiples. That pattern is playing out now. But Rasgon argues this time may be different. "Fundamentals still look like they're getting better, not worse," he says. Nvidia has guided for at least 70% revenue growth next year, with demand sufficient to support 100%. Broadcom has indicated it can double AI revenue next year and double it again in 2028. Memory companies report supply-demand dynamics will be even tighter in 2027 and 2028 than in 2026.

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What you'll learn

  • 1 (00:15) **Introduction & The Market Conundrum** - Jack Farley introduces Stacy Rasgon and frames the central tension: semiconductor earnings are up ~100%, but multiples are down and stocks are off their June highs.
  • 2 (04:41) **Demand is "Off the Charts"** - Stacy details findings from his recent Silicon Valley roadshow with 11 semiconductor companies.
  • 3 (08:16) **The "Return on Investment" Question** - The discussion shifts to the bear case: what happens if hyperscalers don't get a return on their massive AI investments?
  • 4 (10:53) **The Double-Ordering Trap** - Stacy explains the classic semiconductor cycle dynamic of double ordering and why it's a key risk.
  • 5 (13:13) **Are Chips Just Sitting on the Floor?** - Jack asks about the narrative that hyperscalers have bought chips they can't deploy due to data center delays or backlash.
  • 6 (16:39) **The "Absurdly Cheap" Math** - Stacy walks through the forward P/E math for Nvidia and Broadcom based on their growth guidance.
  • 7 (20:24) **The "Bottleneck" Stock Rotation** - Stacy explains the market dynamic where investors rotated from AI leaders (Nvidia, Broadcom) into "bottleneck" stocks (memory, networking, power) earlier in the year.

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Show Notes

This episode is brought to you by Sarmaya Partners. Learn more about Sarmaya’s LENS ETF, their full data and comparison, including performance here:

https://sarmayaetf.com/

Semiconductor earnings have roughly doubled this year, yet chip multiples have compressed and the stocks are still well off their June highs. Stacy Rasgon, Managing Director and Senior Analyst covering U.S. semiconductors and semicap equipment at Bernstein, joins Jack to explain what the market fears and why he thinks the cycle peak isn't here yet. Fresh off his annual Silicon Valley roadshow, Stacy says demand is "off the charts," nobody has enough compute, and the real constraints are land, power, and clean rooms rather than customer appetite. He explains why Nvidia and Broadcom have lagged the "bottleneck" trades in memory, optics, and power, and why both could trade at 11–12x earnings if their growth targets hold. The conversation covers the HBM-driven memory squeeze, his path to $300 billion-plus in wafer fab equipment spending, and why he leans toward Applied Materials in semicap. Stacy also explains why he doesn't hate Intel for the first time in his career, why traditional cycle indicators may no longer work, and how today's AI buildout differs from the dot-com bubble. Recorded October 5, 2026. 

Stacy Rasgon on X https://x.com/Srasgon

Stacy Rasgon on LinkedIn https://www.linkedin.com/in/stacy-rasgon-6924963/

Jack Farley on X https://x.com/JackFarley96

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