The artificial intelligence investment boom may be entering a new phase, with investors increasingly turning their attention away from software companies and toward the semiconductor manufacturers supplying the hardware that powers AI systems.
That’s the view of Nigel Green, CEO of global financial advisory firm deVere Group, who says Wall Street is beginning to recognize that the biggest opportunities in artificial intelligence may lie deeper within the technology supply chain.
His comments come as memory chip manufacturers SK Hynix and Micron reached $1 trillion market valuations for the first time, fueled by surging demand for high-bandwidth memory (HBM) chips used in advanced AI applications.
For much of the AI rally over the past two years, companies such as Nvidia dominated investor attention. But Green argues the market is now rewarding businesses that control critical components needed to build and operate AI infrastructure.
“Wall Street spent the past two years believing Nvidia was the AI trade,” Green said. “Now the market is starting to realize the real power may sit deeper in the supply chain.”
Advanced memory chips have become essential for training and running large AI models developed by technology giants including Microsoft, Meta, Amazon and Google. As these companies invest hundreds of billions of dollars in data centers and computing capacity, demand for specialized memory has accelerated.
That shift has transformed memory chips from what was once viewed as a cyclical commodity business into what many investors now see as a strategic asset.
“The AI boom is becoming less about who builds the models and more about who controls the choke points,” Green said.
He believes the market is aggressively repricing companies that supply AI infrastructure rather than those creating consumer-facing AI products.
The trend has also concentrated market gains among a relatively small group of semiconductor companies. As money continues flowing into AI-related stocks, chipmakers have become a major driver of equity markets even as other sectors contend with slower earnings growth.
Still, Green cautions that the rally carries risks. Current valuations assume AI spending will continue expanding rapidly for years, leaving markets increasingly dependent on a narrow slice of the technology sector.
He also noted that governments are treating semiconductors as strategic assets because of their growing importance to economic competitiveness and national security.
Whether the shift proves lasting remains to be seen, but Green believes investors who continue focusing solely on the biggest AI software names could be overlooking where the next stage of growth is taking place.
“The market has already moved on from the first phase of the AI trade,” he said. “A lot of investors still haven’t.”