Bernstein: Semiconductor earnings upgraded 113%, AI demand shows no sign of slowing

TechFlow reports, according to Chaoxiang Research, in a Sept. 22, 2026 research report, Bernstein noted that the SOX index had seen year-to-date forward earnings revised up by 113%, with valuations revised down by approximately 18%. Even during the 15% pullback from its June peak, earnings were still revised upward by about 25%. Semiconductor sales grew 144% year over year in June and 131% in July; notably, memory sales surged 452% year over year in July, while non-memory sales rose 35%. The valuation premium of the semiconductor sector relative to the S&P 500 fell from roughly 62% last quarter to about 17%.

Bernstein believes that AI demand shows no signs of slowing down, with tight supply and demand spanning key components such as advanced packaging, wafers, and memory. NVIDIA has guided for over 70% growth in 2027, while Broadcom has hinted that 2027 revenue could double. The firm is bullish on compute chips and semiconductor equipment, assigning an Outperform rating to NVIDIA, Broadcom, AMD, Applied Materials, KLA, and Lam Research, and recommends tracking the divergence between AI demand and downward valuation revisions.